Two Types of Payment Processors Merchants Should Know about

There are basically two types of processors, under which most of the payment processing entities will fall. These are: 

Front End Payment Processor

    For payment, the customer can prefer transaction through online submission or cab make a card swipe with POS.

   Now the merchant will send the credit card information with the obtained amount to the acquirer.

·         The information is further processed by the acquirer to the bank.

·  Now the bank will verify the status of customer’s account and will accept or decline the transaction. 

   After the verification, the acquirer sends a code to the merchant and asks the customer to sign the receipt.  

Back End Payment Processors

·         Initially, the merchant will send the settlement to a merchant bank processer or acquirer.

·         Now the acquirer will get the details from the credit card network and process it to the issuing bank.

·         Here the bank approves or rejects the transaction and returns it to the network and allows to debit the amount to customer’s account. 

Now the bank will send the debit statement to the customer at a predetermined date.

Businesses Having High Risk Tolerance

Merchants are often curious to find out, if they qualify for opening a high risk merchant account. Most of them fail to find the correct answer and thus they go misguided. But in this write-up, we’ve provided a list of businesses that can easily qualify for securing a high risk merchant account for processing payments via customer’s credit card.    

If you find yourself involved in a business listed below then it’s time to open your high risk merchant account immediately. The list is as follows:

1. Telemarketing Companies

2. Websites for Adult Entertainment

3. Casinos

4. MOTO (Mail or Telephone Order)

5. Online Gaming Websites

6. Credit Repair agencies

7. Online Auctions

8. Websites for Online Project Bidding

9. Lottery and Gambling

10. Multi-level Marketing Firms (MLM)

11. Online Pharmaceutical Stores

12. Dating Websites

13. Forex Businesses

14. Prepaid Debit and Cash-on-Delivery Method of Payment.

15. High Volume Business in the field of online retailing 

 

When Can a Bank Refuse Your Merchant Account Application?

Banks have stringent rules and regulations for accepting or rejecting merchant account applications, especially if we’re talking about high risk merchant account. Sometime the smallest of mistakes can get your application rejected. For novices it is common to fall prey to the following common mistake. Take a look to avoid a rejection. 

1.    Improper Documentation 

Banks demand a large number of documents to be supplied with each application in order to get every detail about the merchant before issuing an account. However, failure to supply any of the required documents can result in rejection of your application. 

2.    Better Business Bureau Complaint Record

In case any consumer reports are registered against your company at the BBB, you should do whatever it takes to rectify the problem or it might become the reason for your application rejection. 

3.    Misrepresentation

Banks go to a great length to verify whether information furnished by you is genuine. So make considerable efforts to ensure you only provide them with accurate information.

Know More about Different Merchant Risk Profiles

A variety of products are being sold over the Internet as well as at local stores. The merchants are identified by the items they trade, their payment processing techniques and profit margins. High risk merchants have well identified their business types and risk levels which help in measuring their performance by the counterparts. 

Given below is the categorization of different merchant business profiles in accordance to risk levels. 

1. Low Risk Merchants

Restaurant owners, toy and book retailers fall under the lowest risk category. They find it easy to qualify for normal loans, and rarely find any need to open a high risk merchant account. 

2. Medium Risk Merchants 

Merchants dealing in telecommunication services, health products and education sector fall under the medium risk category. They find it beneficial to open a high risk merchant account for processing credit card payments on their store.

3. High risk Merchants 

Online auction, gambling and debt collection agencies are considered highly risky by the nature of business. They make the largest pool of high risk merchant account holders.