Merchant Account Questions That I Hate.
I have been working for quite some time now as a merchant account consultant. I have encountered some super hateful questions asked by few merchants. In this blog post, I have listed few of them and also shared my views about why I hate these questions.
What is the Chargeback threshold?
It is a common question that we get to hear. The merchant is subconsciously aware that he will attract high Chargebacks(CBs). High CB may lead to the account closure.
My response:- I can’t lie, the CB should not cross 1%. You know what happens next? Many of them hang up the call.
Observation:- A genuine merchant will instead ask for ways to reduce CB.
What is the chargeback Period?
This is another common question asked by merchants who are aware that they will get massive CBs. They want to know how long the customer can raise a dispute.
My Response:- Rules are Rules. On most of the cards it is minimum 180 Days.
Observation:- Genuine merchant will hardly ever ask this question. They know that if they offer better customer satisfaction, then the customer will rarely raise disputes.
What is the minimum payout?
This may signify a merchant who is not sure about proper sales forecasting. When a merchant fills a merchant account application then he has to mention critical values that are
- Monthly Sales Volume
- Maximum Ticket Size
- Minimum Ticket Size
- The number of transactions per month.
Despite mentioning the above-stated information if the merchant asks for minimum payout, this means that he doesn’t have proper planning to achieve the projected sales.
My Response:- Only process up to the maximum sales volume as approved on the account. Never cross the maximum ticket size as approved by the payment processor. Daily and weekly sales should follow the monthly sales average as approved by the processor.
Observation:- Genuine merchants understand the value of the merchant account agreement and fulfill the sales forecasting as per the contract. Startup merchants may ask these questions, and most of the times these accounts will hardly help processors make any profit.
Is it a 2D gateway?
One more common question that I get to hear from few merchants especially from China, India and other Asian countries.
My response. 3d filtering is for the security of all the parties involved in the processing ecosystem. Why do you want a solution that may be used by fraudsters? What if the card belongs to an individual who is deceased.
Observation:- In most of the Asian nations its is mandatory for processors to use 3DS. Some merchants may find it challenging to use this kind of solution depending on their business model(In many cases it may be of grey shade). Usually, these kind merchants end up getting a lot of CBs and hardly help PSPs make any profit.
My monthly online sales will be over 100 thousand dollars, but I have no traffic on my site and have no processing history. Can I get a credit card processing solution with high monthly volume approval?
It is hard to believe that there may be a way to generate such a high sales volume immediately after getting the merchant account. Exceptions are always there, but in most of the cases, it is hard to believe. These accounts may end up being used by other merchants. Yes, sometimes these accounts may be used for transaction laundering.
My Response:- The Payment Service provider sets the monthly limit after analyzing multiple factors. Unfortunately, it’s hard to comment how much monthly volume you will be approved for at this stage.
Observation:- It is a good idea to approve a small monthly sales volume for startup merchants.
Why do you need a non-expiring username and password to my website?
Processors sometimes require a non-expiring username and password of the site. They ask for it to monitor the sales activities of the merchant. Genuine merchants should not have any issues with sharing these details. It is a right approach to have the logins to scan the website randomly. Of course, this does not involve the access to emails and server but only to the admin area of the site.
My Oneliner Response:- It’s a compliance Requirement.
Observation:- Merchants may have their views about sharing website credentials, but genuine merchants will undoubtedly share the details. If the merchant is not ready to share the details, then the application should be placed on even more rigorous analysis.
Why it is hard to get a virtual terminal for my call centre.
Traditionally call centres have used virtual terminals. Now things have changed. Getting virtual terminals for card processing is hard. Merchants may get Virtual Terminal for ACH and Echeck processing.
My response:- A virtual terminal is considered to attract a high level of risk in comparison to the hosted 3d secure payment page. If the customer can share card information on the phone why would he not submit that card details on merchants website? A website can accept multiple transactions at one time, but a representative can only collect one transaction info at one time.
Observation:- Fraudsters may use a virtual terminal to charge stolen cards. Extreme care should be taken to approve a MOTO solution. In some territories of world VT is prohibited. In case if India all PSPs only offer 3D secure API integration.
Why is high ticket size a concern?
In some industries, ticket size is generally very high, and it is becoming increasingly difficult to get approvals for these industries.
My Response:- High ticket size attracts more credit risk. Processing companies prefer to work with merchants with low ticket size and low CB ratio.
Observation:- For an experienced merchant with stable processing statement, good credit score, visionary business plan and strong P&L statement a higher ticket size may be ok. It becomes a challenge for startups who are very new to e-commerce and online sales. Newness may result in customer dissatisfaction, and this can invite high credit risk in the form of chargebacks.
What I sell is only my business why are you concerned about the business model. Just keep the fees and let me process. (Powered by Frustration – Nothing Personal)
That was a rude statement but unfortunately, we get these statements. We understand that multiple rejections from various processing companies may have powered this statements.
I recently did speak to a merchant, and I got the exact statement. Merchants who are not honest in disclosing the product and service details may be selling something that is prohibited.
My Response:- I am sorry, but I won’t be able to help without getting these details. (A calm mind can even overcome a storm)
Observation:- Merchants who may not comply with the requirements of the processing institution may attract future losses. These applications sit for ages in the mailboxes of consultants, ISO, and Resellers. Luckily there is a delete button on all the favorite mailboxes.
What is the Maximum Ticket Size?
You are not going to adjust the prices of products as per the max limit that you can get from the processor. To stay ahead in the market, you need to price the product as per the market not as per the limit offered by processors.
My Response:- A complete risk analysis and underwriting can only determine the maximum ticket size. It will be premature and will be guesswork to suggest a max value as of now. Let me request you for the application and KYC first.
Observation:- Understanding the service and product that is being sold by the merchant can help in understanding the risk. Looking at the pricing of similar products and services on the established website can also assist in analyzing a massive variation in pricing, if the product is cheap and pricing is high, then it may create challenges.
Is there a monthly or weekly minimum volume requirement.
Financial institutions do not prefer to work with unstable merchants. Every merchant services sales individual is required to generate sales forecast. The forecast of a processor depends upon the commitment of merchants. If the merchant asks this question, then there may be a possibility that the account may not process well. It may hardly help in generating any profit.
My Response:- Average transactions per day and per week should follow the monthly approved limit.
Observations:- Its good to discuss with the merchant about the monthly sales volume and educate him about the average transaction per day, per week and per month. After this, the merchant may suggest a more accurate processing volume, and this may reduce the chances of activating risk control reserves in future.
What’s the security of my money?
I am sorry, but it makes me laugh
My response:- Processing companies make money when the merchants accept transactions. If the account closes then the funds either go back the cardholders or the merchant(mostly after 180 days).
After giving Gyan. (What is Gyan read this.) I put a counter question. Why would a processor be willing to lose the merchant when the merchant is not doing anything wrong. Having said that we would recommend you to check for reviews online before signing the merchant account agreement.
Observation:- There have been instances of merchants losing funds and this has created fear in some merchants. This question must be answered with compassion and it may help the processor to convince the merchant.
Can the setup fee be deducted from the payout?
Processing companies may charge a setup fee, and most of the time this charge is nominal and is charged with activating the account.
Observation:- If the merchant is not ready to make the payments of setup fees then there can be 3 reasons.
- The merchant does not have faith in his business model.
- The merchant does not have faith in the processing company.
- Merchant is refraining from putting even the slightest of investment.
All these reasons may result in an irregular transaction flow, and the sales forecast may not be achieved properly.
Why you need so many KYC documents.
My Response:- KYC is vital for any financial institution. If the merchant refrains from providing necessary KYC docs, then there may be a possibility that the merchant is trying to hide something.
Observation:- I was recently working with an exporter who was reluctant in sharing last one-year business bank statement. Just because of this discrepancy the processing company declined the account.
Why you need my bank account statement.
If the merchant is running a business, he must have a bank account. In case if the merchant is not sharing the bank statement, then there may be a possibility of the following
He may be using a merchant account in the past and is not willing to share information about the same.
The merchant may not be financially stable.
Observation:- It helps to educate the merchants about the importance of KYC or KYM documents. Most of the times the merchant will understand. In case if they are not convinced then most of the times the compliance team will not proceed with the approval.
Which industry is a Low-risk industry? Can I show a different business model and get approved?
Merchants who are not able to get a credit card processing solution generally ask this question so that they may try to misrepresent the business model.
Observation:- Merchant should be recommended not to misrepresent the business model as it may result in severe challenges like TMF and MATCH list inclusions. It may also create severe problems for resellers as they are connected with the processors or on legal terms.
I won’t send you my documents and show you my website. Let me know if you can approve me or not.
Lol Lol Lol… This was a crazy conversation I had on Skype. The merchant said its a product that people buy on the internet. He wanted to know if he can get a merchant account or not.
Being professional I cant make the merchant realize that sometimes my blood pressure goes high.
Even after multiple requests, the merchant did not reveal the business model. I only had one option left, and that was to press the panic button and block the merchant on skype. I am sorry, but I was not left with any other option.
Observation:- Merchants must be 100% honest to get 100% assurance from processing companies. Show what you sell and sell what you show.
No one asked me for a supplier agreement why do you ask.
If the merchant is selling tangible products, then payment service providers do require a supplier agreement. It ensures the source of the product and also the delivery timeline.
Observation:- Merchants should be educated about the importance of suppliers agreement. Sometimes startup merchants are not aware of these kinds of arrangements.
Can I let my Brother/Friend use this merchant account for his business?
Alert. This may be the real intention of getting the account. Since the other individual is not able to get a solution, the merchant is joining the game.
Observation:- Consultants should straight ahead respond with a definite NO. The underwriting team should strictly check all endpoint to rule-out the possibility of transaction laundering.
Written while listening to the fantastic Tibetan meditative music(om mani padme hum). Happy processing. Send us your questions about ach payment gateway usa and global card processors. We will be happy to share our neutral views.
Disclaimer:- The above information may have errors and should never be considered accurate.