Forum Moderators: buckworks
So basically I now have to open three seperate merchant accounts for my three different products. Is this standard proceedure or am I being taken here? What happens when I expand to 20 different products, then I'll need 20 merchant accounts? Come on. They say the only way around this is if all products come from the same 'source'. By source I assume they mean distributor or manufacturer.
How do large internet companies get away with selling hundreds or even thousands of different products?
Has anyone heard of this before? I find it extremely inefficient that just because a product is different it needs a seperate merchant account, even though it's sold under the same business, same address, same everything.
Any advice?
Our merchant processer says we need seperate account for each domain.
We went with the, what they don't know won't hurt them, attitude and have since changed merchant providers.
It is very hard to get a merchant account on the terms you want. But once you have one, you atarting putting up good numbers and have very low chargeback rates. They start climbing over each other to get your business and let you do what you want.
What I don't understand is why they can not just give me the title 'General Internet Retail'. Since it's all run under the same business.
What is considered a low chargeback rate for an internet business?
I do six figures a month with a less than 1% chargeback rate. And I am not being treated as a valued customer.
Do your merchant account companies also have strict standards when you increase your sales volume? Meaning do they require a new risk assessment evaluation? For me they are requiring a reserve bank account that takes a percentage of my sales and holds it in case of excessive chargebacks. Currently that account has over $15,000 in it and they still consider my new volume a risk without a new evaluation.
Am I being mistreated here? Can you recommend a new merchant account provider? Currently my discount rate is 2.61%. Any ideas?
In any event, 2.61% seems high - I think you could shoot for 2.1% to 2.3%. And scrutinize every piece of paper they ask you to sign and any online agreements you "agree" to you. If you're not careful, they're gonna try and stick you with a fee. Its all very digusting the business practices some merchant account providers engage in to make money.
1) I know our merchant bank considers any chargeback percentage over 0.25% to be 'excessive.' They implement a reserve equal to 3-5% of average monthly sales volume if you are above that level. Certain industries are considered high risk regardless of your personal track record.
2) We offered the last 6 months of statements and our corporate bank account statements to our merchant bank's risk assessment group and that helped put them at ease.
3) When you are running six figures a month, you are both a strong asset and a strong liability to them. Let's say you put $200k in fraudulent purchases through the system and then disappear. Your merchant bank would get stuck with the bill. That's what they worry about. You need to do what you can to persuade them that you are on the good side:
You can offer to complete a security assessment, an onsite evaluation, etc. At that level of volume I believe you only have to do it quarterly. There are also some Visa/MC association compliance options - CISP compliance - that can put you into the group of lower risk accounts. Not only will it set your bank at ease, but it will also help you significantly when shopping around with other merchant account providers. You'll be able to say, "hey, I'm doing this right."
Offer to participate in the Verified by Visa program. Neither you nor your merchant bank are liable for those chargebacks.
I haven't once heard of a merchant provider claim that you can only sell one type of product per account. Maybe that's because we put everything through a gateway first (like Verisign for example.) Perhaps you can 'hide' behind your gateway and they won't see your products?
Perhaps you can convince them that your widgets are all in the same broader categories.
Finally, 2.61% seems a bit high. If your transactions are less than $50 each, you may care more about the per transaction fees, but above $50, I think you should push to get that lowered. Lots of banks would be happy to service a 6-figures account with less than 1% chargebacks.
I do six figures a month with a less than 1% chargeback rate. And I am not being treated as a valued customer.
Dump them, if you're doing that much volume you can negotiate a nice deal anywhere.
Currently I have a reserve of 15% of my monthly volume and it sounds like they want 50%.
I've been with them 2 years, so they shouldn't have such a big fear that I'll suddenly disappear, but I guess they still do.
A 15% reserve is way too high. Even in high risk accounts, reserves do not go over 10%.
It's not uncommon for a high volume account to have an initial reserve with a new processor. But, if there is a history of excellent processing, with chargebacks under 1% often there is no reserve required.
Since you already had a good history with your processor, it's unclear why a reserve has been implemented. If your processing jumped more than 2x your average monthly volume, and you did not communicate with them the reason for the large increase prior, the system raises red flags for possible fraud. If they knew the increase was coming, they should have worked with you.
Interestingly enough, an account can also be penalized if processing taking a sharp downturn. What the underwriters want more than anything, is stability in an account. Any quick deviation gets them nervous.
Different websites under the same company ownership can be part of one merchant account. Each website would be assigned a separate "terminal ID#". It's similar to having different retail locations running under a headquarter's account.
If all your products can be placed under the same general category, as has already been suggested, you can use one merchant account. But, if product lines are widely diverse or carry different risk paramaters, you may, indeed, require more than one account. For example, a book that is shipped vs one that is downloaded.
We switched to Bank of America eStores recently and are happy with the service as well as features ( AVS/CVV etc etc) We did noy have a previous account with them, just walked in and set it up on the merit of our track record with the previous provider.
The previous provider was also holding back 50% of our monthly volume!
BoA holds back nothing (though we are still waiting for the old company to release our funds)
We have been selling product direct online for just over a year, though our company has been around since the dot com boom.
jbailey
I already have a corporate B of A bank account, so this sounds like an excellent option.
Thanks
Tom
I think B of A calls their API "eStore."
