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My merchant account wants to hold 10%, is this normal?

     
2:12 pm on Mar 30, 2010 (gmt 0)

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So my merchant account provider wants to hold 10% of the total sale for a month based on the 'risk' of my website because I said once the card is charged, it will take 6-7 days for the products to reach the customer.

The 10% will be held for a month, then I will be given that amount back.

Also, they are giving me my $ once a week.

Is this normal or am I getting a bad deal here?
2:16 pm on Mar 30, 2010 (gmt 0)

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Are you a new account? 6-7 days is not an adnormal amount of time maybe it is on the verge of being on the long/slow side so you might get a few complaints. I would have the time to get products on my website so it is a know fact how long it takes after the card has been processed.

Question how long does it take after getting the order until the prooduct is shipped?

[edited by: bwnbwn at 2:21 pm (utc) on Mar 30, 2010]

2:20 pm on Mar 30, 2010 (gmt 0)

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Yes this is a new account, first time.
2:26 pm on Mar 30, 2010 (gmt 0)

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Well this is why. I didn't really go through this back when I started my ecommerce business, but given the fact there has been many changes in cc processing I would figure it on the normal range.

Opened an Amazon account to take orders as an add on to the site about a month ago and they are holding mine for 2 weeks until I build a track record. Rep with Amazon said it may last 6 months. I did have a small fit but understand why. This is a business been active on the web for 10 years now with the same merchant services.

I guess there have been many scammers and the processers have been burned so all new accounts go through a period of building trust.

Did you ask them how long this would last?
2:34 pm on Mar 30, 2010 (gmt 0)

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No I didn't, but he said we can revisit this in the future.
2:35 pm on Mar 30, 2010 (gmt 0)

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K you didnt' answer my question on how long it takes from purchase till the cc is processed.
2:45 pm on Mar 30, 2010 (gmt 0)

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My payment processor has a flat rate retention which is roughly 150% of the highest estimated transaction.

I can see the risks here for the processor from chargebacks, they don't want the merchant account going into debt and the merchant just trying to walk away from it.
2:49 pm on Mar 30, 2010 (gmt 0)

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Authorize on checkout, charge the next day or day after (when it ships, so it ships either the next day or the day after). Shipping only to the US, so ship times should be 3-4 days I would imagine.
2:52 pm on Mar 30, 2010 (gmt 0)

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Not bad at all on the ship so you should be fine. I was kinda scared it would be 2-3 days then tack on another 6-7 days and I know there would have been problems looking at 10 days for delivery.
2:53 pm on Mar 30, 2010 (gmt 0)

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piatkow how long you been under this?
3:29 pm on Mar 30, 2010 (gmt 0)

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it also depends on what your selling, i'm selling electronic toys.
7:33 pm on Mar 30, 2010 (gmt 0)

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They are all different. I would suggest asking a few whether they need reserve funds and going with one that does not.

You really should not agree to a 10% reserve, that's just a nice ongoing free loan for the bank if you stay in business a long time. And we all know that loans are not free.

Once a week? More evidence they need to hold your money awhile. "Normal" merchant accounts deposit within a couple days.
9:01 pm on Mar 30, 2010 (gmt 0)

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I work closely with a variety of clients with merchant accounts, and I've never heard of this. Ever. (Maybe I should get out more . . . . but . . . never.)

There has to be some other factor involved other than "6-7 days for the products to reach the customer." Heck, one of my client's sites says up to 14 days for parcel post, you know why? Because that's what USPS claims it could take!
2:04 am on Mar 31, 2010 (gmt 0)

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what kind of electronic toys? is this your own merchant account or third party (starts with a 2)?

reserve is usually not a big deal.

risk is delay in funds. as long as you don't finance your business with cash flow you should be okay. any surge in sales will be hard so you need to have in your bank account one month of money that equals your best month.

unless you have 2c, sounds like you got one criminal of a merchant account
 

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