MP3 MERCHANT ACCOUNT RESERVE

Merchant account reserve is a part of the monthly revenue for processing a trader’s credit card transactions that may be kept by the credit card processing firm. The reserve is held as a precautionary measure so that if chargebacks or possible losses occur, the credit card processing firm can claim the losses from the reserve. Merchant account reserve is generally applied to high risk merchant accounts. Once the pre-determined period is successfully completed, the reserve will be handed over to the merchants. This process of holding back a reserve will be repeated each month till the reserve does not exist anymore.

There are a few businesses that are considered as high risk businesses. These businesses usually have higher chargeback levels. Dealers who do not operate in the face to face environment are usually categorised as high risk merchants. Direct marketing and e-commerce are classic examples of high risk businesses. However, only a few high risk businesses are asked for a merchant account reserve. In most of the cases, businesses involving high volume processing have a large average ticket. New businesses operating online are also candidates for merchant account reserve. Merchant accounts falling in the high risk category that do not have U.S processors are usually asked for merchant account reserves if they apply for offshore merchant providers.

If a trader does not have a good credit history, he or she will be asked a merchant account reserve. Such merchants will also be asked for personal guarantees. When merchant account reserves are needed, small business merchant accounts should have a minimum 20% reserve balance. New merchants can build their merchant account reserves by sending their transactions that haven’t been withdrawn as yet till the needed reserve balance is achieved. After reaching the required minimum balance, a merchant will be in a position to withdraw the excess funds into his/her respective checking account.

All the merchant account credit card processors have an underwriting policy. Therefore, it is a good idea to ask for several proposals for credit card processing before taking a final decision. When you look at a number of proposals, you will come across certain credit card processors who do not require a merchant account reserve. It is very important for merchants to know that the merchant account reserve is an amount that is kept due to very justifiable reasons. In short, the merchant account reserve is simply a fallback system for the acquiring banks as well as the merchant account providers. While selecting a merchant account provider, there are several factors that a trader needs to consider before finalising on a provider. Merchant account reserve is one of the factors that need to be considered. The other factors that are trader needs to consider include services such as fraud prevention techniques, chargeback managements, risk tools, consumer service, transaction reporting capabilities and processing costs. Finally, select a merchant account provider that meets all the requirements for your business as well as aids in the effective running of the business. 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.