How Banks and Ecommerce Sites deal with accepting card transactions.

Research on the credit card processing and merchant account industries. For a business to build revenue and sales, its common for them to accept multiple forms of payment. Payment can come by cash, check, or credit card. Credit card payments are an electronic process between the credit card holder and the services called a merchant account bank. Most common credit card transactions are merchant processor networks known as visa, mastercard, amex and discover. Lesser common networks include diners club. If you have a business and need to accept credit cards there are certain equipment and merchant service bank relationships you need to get started. You may be classified as a "risk high merchant" business if you for example accept credit card payments over the interne! t. Or ! you can be classified as "risk low merchant" establishment if you accept credit cards and also require a signature on the credit card statement receipt. For example if you own and operate a collection agency, merchant accounts for collection agencies are flagged as the higher risk, since they may result in numerous chargebacks and issues where card holders dispute and refuse payment. It is imperative for almost all online business today to find solutions to accept visa and mastercard. Doing so greatly enhances your companies chances of success.

Common Types of High Risk Merchant Accounts:

Offshore Credit card Processing: In some cases a business is so high risk for example an online pharmacy or online gaming enterprise that all domestic/usa banks will refuse to do business with the merchant. A company will then need to find an offshore service to process their credit card transactions. Credit card processing offshore allows a usa business to avoid the stricter regulations they might find when dealing with adomestic merchant bank. By using an offshore merchant services they can avoid these pitfalls.

Dating/online dating website: These websites are typically classified as "High Risk". Dating/adult merchants are often classified as high risk due to the nature of their businesses. Frequently a customer of a dating website will deny the charge on their credit card and issue a chargeback. A chargeback is when a customer disputes the charge as invalid and refuses to pay. It could be the customer did not want their spouse to know they were at a dating/escort or adult website who processes credit cards. So they claim that they did not place the order and file a dispute with their credit card company. Because they receive high chargeback ra! tes, d! ating/adult websites are often tagged as higher risk and pay higher rates.

Travel Industries: These business typically handle airline ticket, car rental, and hotel reservations. A travel industry business maybe online or offline. The travel industry is also often tagged as high risk due to the nature of customers complaining about accomodations that they have never stayed in before. A hotel which has a glossy review online but is not what it appears to be in person may result in customers cancelling their reservation. Or a hotel will frequently charge a customer for a hotel room even if a cancellation occurs. Due to the higher risks involved with the travel industry, travel agences need a merchant high risk solution to process their customers credit card transactions.

Collection Agencies: Collection agencies are companies that collect debts from consumers and other businesses. A business will frequently hire a collection agency to go after and collect on deliquent accounts. In often cases someone who is being called by a collection agency in many cases has a poor credit history and is not reliable source for payment. Due to the nature of the type of clients that collection agencies deal with they are often tagged as "highest risk" and will typically have to pay higher transaction fees to the merchant bank for a collection agency. There are few ways to avoid this other and it typically becomes a cost of doing business for the collection agency.

Other High Risk Rates: Other companies who pay the highest merchant account rates include online pharmacies and online gaming. Online gaming industry has been rocked by new laws that were established in the fall of 2006 that forbid any US banking institution to accept payments from US based residents. Violators of these new laws have been faced with hefty fines and prison time. Currently there are limited if any merchant account solutions for a US based business. Online pharmacies have also faced criminal prosecution for providing prescription medication to consumers over the internet without a prescription. A legal pharmacy offering prescriptions online should have no problems getting a merchant account, however the area is filled with issues to legality of an online pharmacy. It is difficult for a high risk industry to get lower rates on credit card transaction processing ! fees. ! An established company with a 20 year period maybe offered the best rates, but in most cases a high risk business will often be flagged at a much higher rate until their business processing history can be established.

This research has been based on information found on several websites including the wikipedia merchant page, and this merchant account tutorial information was found online written by this company that helps a business accept credit cards now.