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INTERESTING FACTS ABOUT ACCEPTING SPORTSBOOK CREDIT CARDS ONLINE

The primary requirement to accept credit cards (offline or online) is the merchant account. It is an understanding between a financial institution or bank and a merchant. Home based and small businesses experience several difficulties to obtain a merchant account and online businesses face a lot more.

The reason for this is: Internet transactions do not happen at the POS or point of sale. They come under the “non face to face” category of transactions. Since, you are not seeing the customer there is no way to easily ascertain the customers identity, therefore, there isn’t a way to make sure that the card is being used by the legitimate owner. Therefore, this exposes all the internet merchants to a high risk of fraud.

Adding to the woes of internet businesses, the credit card firms give their customers an option to file for a chargeback. A chargeback happens when a customer contests the charges on his credit card. When this happens, the merchant has to pay the entire transaction amount to the bank with a chargeback fee which can cost the merchant about $30 or even more. Also, he will not be able to get his merchandise back as it costs money and time to track the fraudster. For example, suppose you sold a book which costs $20 and later the card holder files for a chargeback, then you have to pay back $20 together with the chargeback fee of about ten dollars costing you $30. Also, you may not get your book back which will take the total loss incurred to fifty dollars. $50 dollars for one transaction!!! Imagine what chargeback’s can do to you and your company.

As a result, most banks take a reserve amount from you while giving you merchant status. According to historical reports, the chargeback level during face to face transactions is 1%. The potential is much greater with “non face to face” transactions such as internet transactions, thereby increasing risk for both the merchant and the bank.

Therefore, the banks take stringent steps to minimize their risks. Any business that has applied for merchant status must fulfil several criteria’s set by the bank. Some of the factors that they consider are cost of items being sold, volume of the business, refund policies, debt load, credit history, and tax returns, experience, and cash reserves. Other sources of income are also a factor.

If you run a high risk business then you will most probably not get merchant status from any bank. You have to obtain merchant account from a “High Risk Processor”. They charge high rates and higher transaction fees because they take more risks.

Other Expenses

The expenses due to chargeback’s are the biggest concern for any merchant who is looking to open a merchant account. Chargeback’s result in huge financial losses. Moreover, those merchants who have a high number of chargeback’s will have their merchant account terminated.

Some other expenses that a merchant has to be careful about are hidden costs. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.