Risks Involved in Getting a Merchant Account

Starting a business is risky especially with what the risks involved in getting a merchant account are. If you weren’t willing to take those risks, you would still be working for someone else and collecting a weekly paycheck. Instead, you decided to go out on your own and create something meaningful. When you expect to get the most out of your business, you must be able to accept credit cards and setting up a merchant account is the first step to accepting a variety of payment types.

Like many other aspects of your business, there are risks specific to setting up your merchant account that you should be aware of. When you know what to expect, you can properly prepare and ensure that you do not suffer any ill effects. Ultimately, a merchant account is meant to help your business operate more smoothly, so as long as you keep these in mind you can move forward with confidence.

Business Could Go Poorly

In the case of a merchant account, a slow business is not really the issue to worry about. Instead, what the risks involved in getting a merchant account are related to receiving credit card payments that your clients could demand charge backs or refunds after you have already disbursed the income from the payment. If this occurs too often or in excessive amounts, you could end up owing more back than you have in your bank account.

Keep in mind that a merchant account is basically a new credit line and if things go well it will improve your credit rating. By the same token, if you find that credit card payments do not work out you could find your credit rating damaged significantly. The best way to avoid this problem is to pay close attention to accounting. Establish a projected chargeback and refund rate and make sure there is always enough money in the business account to cover these costs. If you keep that number updated, you can properly predict this and avoid the negative consequences.

Improper Fraud Prevention Can Destroy Trust and Increase What Are the Risks Involved in Getting a Merchant Account

More serious than what the risks involved in getting a merchant account are the risk of charge backs, if you chose a merchant account with poor security measures in place, or you fail to protect access to the account on your end, you could run into problems with fraud. In some cases, fraud can be enough to freeze your merchant accounts and perhaps more serious than that, it can give your business a poor reputation in the eyes of the public.

The best way to minimize this risk is to find a company providing PCI compliant level protection and supplement it with your own fraud prevention software.

Watch Out For Hidden Costs

Hidden costs are what the risks involved in getting a merchant account are if you are not careful to read the agreements for your merchant account fully. Many companies have a wide variety of fees that only come into play during certain situations, but all of those extra fees are hidden in the fine print. If you do not carefully read them, you will find that you owe so many additional fees that your profits are simply being diminished.

This risk is the one most easily avoided, but it can take some time. Make sure to carefully read through your agreement and find a company that actually offers a reasonable fee structure.

If you have any questions about the risks associated with merchant accounts, please contact a representative at Transparent today to find out what safeguards you can utilize to make sure your business avoids excessive risk.