Understanding the Essence of a Merchant Account
Ach processing is simply the process wherein the merchant transactions are being facilitated between the merchant per se and any bank or financial institution. This will reflect the contract of the bank that is the one to accept the payments for the products or services on behalf of the merchant. Merchants that are tapping online offshore business should resort to this kind of process where the bank is the one doing the ach transaction process.
There are different classifications for the ach merchant accounts that are identified by the banks or any financial institution based on the risk profile of the account. There are two classifications of merchant accounts. The first type is the normal accounts that is simply defined as a low risk transaction because the merchant has access to the card of the client and even know if the client is legit or not. When you set up a merchant account having a low risk business will now be easy to process.
The other category under the merchant account is the high risk accounts in which there are no other way to validate the identity of your client. That is why the solution to this type of issues to get advice from a company that handles decision making for difficult business accounts. The accounts that fall on the high risk category are those involved in online dating, adult entertainment, online gambling, online auctions and debts services, VOIP merchants, online tobacco, multilevel marketing, and other businesses that don’t have to seek for the physical presence of their customers. With that, there is a high possibility of fraud transactions since there is no physical appearance and the business might just be a victim of these fraud activities. Oftentimes, these high risk ach merchants are trying to create a questionable amount that is charge back to the banks. It is even proven in various researches that having a high risk merchant account are also exposing the business to a fraudulent business transaction.
It is recommended that these businesses partner with reputable banks to manage their online ach processing transactions. Choosing the wrong bank will make things worse.
The banks preparedness for the high risk accounts include their strict implementation of the guidelines that are already implemented by their underwriting department. What the banks often do is just to reject the applications that possess high risk.
Since there is limited availability for the high risk ach providers, the tendency on the rate charge to the merchant is to shoot up and be more expensive. Even banks and other financial institutions are able to change their rate anytime they think is deemed needed. But still there is good news to this. Fortunately, banks today are very helpful to set up the account and do some analysis.