Merchant Account for Overseas Forwarding ShipperWhy do you need a merchant account? Well, if you are into any kind of business which involves accepting payments through credit card or debit card, then you definitely need a merchant account. A merchant account is a specific type of bank account that you will need in order to accept card payments from your customers.
A merchant account can be obtained from Merchant account providers which could be a bank, third party payment processors or other financial institutions. But getting yourself a merchant account is not an easy task. The merchant account provider will scrutinize your business to the minute detail before accepting your application. So then if your business is considered high-risk then getting a merchant account can even become a distant reality.
So what is a high-risk merchant account?
Merchant account providers have underwriters who will examine the financial risks involved in your business. The following are some of the criteria that are used to deem a business as high-risk and therefore their merchant accounts as high-risk merchant accounts.
A chargeback is basically the reversal of a transaction. The funds are removed from the merchant bank account and returned to the customer. Though in any business, returns and refunds are unavoidable a high chargeback ratio of greater than 1% of total transactions is considered as high risk.
Credit card fraud
Credit card frauds can happen with any business, but with high-risk businesses, the possibility is more. As international shipping companies and forwarding brokers involve an international customer base, credit card frauds are more common with these accounts.
Businesses, where the payment is made much before the services or products, are delivered also pose a high risk of chargebacks. This applies to the shipping industry.
Depending on the transactions type, your business could fall under a high-risk category. In a retail scenario where your customer is physically present, it is called a card present transaction and requires the customer’s signature. The possibility of fraud is low in this case.
On the other hand, if the payment is made with credit card details over the phone or over the internet, then it is called a ‘card not present’ transaction. These are considered high-risk transactions.
The typical transaction amount can vary from business to business. So even if your chargeback percentage is low, your merchant account could be denied if your transaction amounts are high. This is especially true in the case of freight forwarders and brokers. So in the case of a chargeback, the card processor has to refund a hefty amount.
But my merchant account application was accepted
Even if you managed to find a provider for your high-risk freight forwarding business, you may suffer the following
Higher set-up fees
Higher transaction fees
Need to maintain a rolling reserve fund
Despite setting up your new merchant account, your provider can shut-off, terminate or close your account. Not every provider can truly manage a high-risk business even if they initially accept your application. Popular card processors like Paypal are known to abruptly terminate high-risk merchant accounts due to high chargebacks or declined payments.
TMF (Terminated merchant file)
When your account is terminated, you won’t be able to receive payments from your customers. What’s even worse, your account will go into a terminated merchant file (TMF).When this happens, applying for a merchant account will be almost impossible as every merchant account provider will check the TMF before accepting your application.
An online merchant accepts card payments over the internet. Even if your business is not considered high-risk, simply being an online merchant can cause your application to be rejected. This is because they involve ‘card not present’ type of transactions which have a high risk of possible fraud.
We can help!
We are a merchant account service provider who has experience with internal shipping companies and forwarding broker merchant accounts. We understand that your business is considered high-risk, more so if you are a start-up business. When you use our services you will benefit from the following key features.
24/7 customer support all year
All card payments are processed securely and safely
As import and export can involve a lot of different countries, you can accept over 100 different currencies
You will be able to track every single transaction regardless of the method of payment
Domestic and offshore or international merchant accounts
No application fee
Mobile payments using mobile phone apps