23 November 2012

So you have a merchant account. Now what?

Read the first part on why you need a merchant account here.

You already have a merchant account, why do you need one more? Naturally every merchant account can cost you financially and also in terms of the time invested in setting it up. There are however a number of reasons why you should consider a second account.

It is a Backup plan

Let’s say you have one merchant account through a payment provider working with bank “A” and another – backup account through bank “B”.

Scenario 1.  Bank A performs major policy changes and the business model you are operating under is no longer acceptable to them. Luckily you have a backup plan – another account with bank B where you can send your volume and avoid losing customers while looking for a new solution.

Scenario 2.  Your payment processor and mediator of your account with bank A encounters a technical problem requiring them to halt processing or worse still suffers a data security breach.

Bottom line once again in cases like this, your back up account with Bank B is the one that saves your business.

It allows for volume diversification and for mitigating the risk

Applicable to all types of merchants but particularly useful for higher risk ones who may have potential chargeback problems and or are subject to high number of fraudulent transactions.

By splitting your volume between two or more processing accounts it is easier to avoid problems with chargeback spikes on any one account. You can easily work with your processors to switch volume between accounts to keep them within the limits.

Last but not least, a second merchant account may make the difference when expanding your business worldwide

It’s also good to consider setting up an offshore merchant account outside the region you currently operate in, particularly if you have a diversified customer base. The advantages of this type of back up account include:

  • Accessing high number of customers from various parts of the world and offering a variety of currencies, which will definitely boost your revenue. International customers will be able to order from your website in their own currency,avoiding the uncertainty of variable exchange rates and traditional conversion charges..
  • Saving money on payment processing fees – you will avoid paying fees for international transactions that are considerably higher, as the transactions coming from this region will be actually local and will cost less.
  • Providing rich choice of acquirers and processors with better services, often more flexible on acceptable business models, discount rates offered and fraud scrubbing tools used.

Clearly a second merchant account is worth considering for many merchants, just look for a reliable and experienced partner, and ideally one that can offer multiple acquiring channels themselves as that will cut down on the amount of paperwork and time.