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Previous: Could Wal-Mart Be Your Computer Store? Seasonal sales are heating up. Will your merchant account keep up? Or will your ability to accept transactions be shut off, and your money held up for months by your merchant account provider? "Can't happen," you say? "Merchant account providers would be stupid to shut down merchant accounts at the busiest time of the year?" As odd and maddening as it seems to a business with sales pouring in, merchant account providers do shut down accounts (thereby preventing the business from accepting charge cards) if the total dollar amount of transactions a merchant processes in a given month is over a preset limit the merchant account provider allows. So, if the merchant account provider has assigned a limit of $5,000 in transactions a month that they will allow to be processed through your account, and you go over that amount, say, by the 20th of the month, you may not be able to process any more credit card transactions until the start of the next month. In addition, merchant providers will shut down accounts and hold back a significant amount of funds for months if they see a very large, sudden spurt in the total sales put through a merchant account and/or an unusual upward swing in the average dollar amount of sales for an account. For example, if you have been averaging around $25,000 in credit card transactions a month, and then suddenly shoot up to $10,000 a day, your account might get shut down, especially if you are an Internet or mail order merchant. If the provider worries that the spurt in sales could be fraudulent, they may hold back a huge amount of funds (ie: not transfer the money to your bank account), as a reserve against possible future chargebacks. That can bury you in a deep, dark cash flow hole if you were relying on the incoming funds to pay off the bills for the inventory you shipped, new inventory, salaries, etc. Why do merchant card providers do such things? Why would they shut down accounts when sales are increasing and a business is growing? The answer is simple: to protect themselves and the credit card companies from potentially huge losses from credit card fraud. Although the bank account tied to your merchant account lets the credit card companies deduct money from your bank account for chargebacks and monthly fees, they worry that you may not have sufficient funds to cover the chargebacks. Or, perhaps, that you may have suddenly turned into a crook will disappear. So, what can you do? How can you be sure your limits are set high enough to process all the orders you expect in the next few weeks (or whenever your busy season is? The first step is to call your merchant account provider and find out if you have a limit and what that limit is. Then, if it's not high enough, ask them to increase it enough to allow you to continue doing business. Note: if you've had a merchant account for a number of years, the provider may have already made a seasonal adjustment to your limit based on past history. But don't count on it. Call and be sure. If you plan to change the nature of what you are selling - perhaps to sell more expensive products and/or a different type of product, find out if you'll need to get a new merchant account. Merchant account providers don't like to give small businesses the ability to process transactions for any kind of product or service they may feel like selling this week. The accounts are usually granted to sell particular types of goods or services such as books and videos, crafts, household goods, etc. If your going to start selling high-end computers over the internet instead of inexpensive used books, call your merchant account provider in advance and get it OK'd - or get a second merchant account. If there is no change in what you sell - just in the volume of business - keep an eye on the month-to-date sales and average daily sales. Call the merchant provider and request an increase in your limit at least a week or two before you'll hit it to give them time to consider and approve the increase. Posted on November 18, 2005 at 12:03 AM| Comments (18) Comments Shortly after reading the article on merchant account limits, I put it to the test. A company had recruited me to represent their merchant services offering. Their advertised rates were low but the account limits were such that the retailer would have been charged extra for going over the company’s set limit. I’ve sinced found another company to represent that is much more ethical. I use the merchant services as an additional service to my main line. Posted by: Tomas Schafer on December 2, 2005 at 2:17 PM Thank you so much for this post! My business is currently in the infant stage, not having been yet weaned, much less cut teeth. Looking at my options as an online merchant, were definately supported by this post. Thank you again so much. You have assisted me in making an important decision more aware as well as given me some assurance that I can make my next move my best move. Thanks Posted by: J.Z. Amennun on January 19, 2006 at 1:12 PM I read your article and wanted to add some comments from a merchant account providers point of view. Banc Certified is a wholesale provider of merchant accounts with 5 major processors in the U.S. When we set merchants up with a processor, we base their limit on past processing volume. If it is a new merchant, they are given a ballpark volume. Posted by: Vladik Chaykovsky on February 23, 2006 at 4:38 PM I know a lot of people who sell only on the Internet, and I think all of them who do a high volume of sales and/or sell high-ticket products have hit limits - usually when they least expected or welcomed them. (IE: mid month when products were flying off their virtual shelves.) I’m talking about small businesses that might easily do $50,000 to $100,000 or maybe as much as a $1 million a month in online sales. Does BankCertified let new vendors play in that big a ballpark? I ask, because I think I saw on your site that Nova is one of the transaction processors you use, and I’m pretty sure Nova sets limits.
Posted by: Janet on February 23, 2006 at 5:53 PM Thre is so much misinformation on these issues. First there is no such technical term as a “wholesale Provider”. It appears that BancCertified is an ISO (Independent Sales Organization) that is a registered agent of both BOA and US Bank of Montegomery Al. The average merchant servivce account in the USA is approximately 100K per annum. Only approximately 8% of accounts process greater than ONE MILLION DOLLARS PER YEAR. An example is given where a merchant is processing approximatley $1,000 per day and then shoots to $10,000 per day. THis acccount will absolutely be placed on `100% reserve and/or hold until a full explanation is forthcoming from the merchant including a review of the financials. There is no maybe about this The concept that you can get a second merchant service acount because you are introducing a second product line is much more complex then suggested. Simply adding another product line does not qualify a merchant for another MID (Merchant Identification Number). You can not have two MIDs assigned to the same business (Fed Tax Number). The exception to this is if there is a change in platform e g a company that has both an Internet and Retail presence should have a separate MID for each platform. In addition if you are selling products of completely different category you need to have a DBA and a holding company. It goes form there Merchant servies is very complex and complicated. We are very experienced consultatns and write extensively in the industry I have never meet a mercant that understands the fundamental rules and regulations. In fact most merchant service sales people have an extremely limited knowledge base and the vast majority are in the industry for less then two years. Posted by: ross on March 1, 2006 at 11:07 PM I am trying to find data on data on the number and size of merchants supported by ISO’s. Can anyone point me in the right direction? Posted by: jeff on June 2, 2006 at 2:23 PM When we set a merchant up for an account we look at their financials and their current processing statement. We then generate a general ballpark of where their processing will be. This is based on the clients average ticket and high ticket volume. Any merchant that signs with us can call us and let us know their volume will increase in the near future due to advertising, or the holiday season, etc. We work closely with our processing partners to give our merchants the best programs. Our customer service experts and customer relations managers monitor accounts on a daily basis to make sure our clients are happy with our services. Posted by: Vladik Chaykovsky on July 12, 2006 at 9:33 AM This is a serious issue for internet marketers (and direct marketers) doing “product launches” and hyped up releases. This also effects those that go from “zero” to huge volume through infomercial sales and so on. As it’s stated above, you MUST call your merchant provider before the sales hit hard. Make sure that they understand the nature of the sudden transactions. And yes, if you’re online, this includes PayPal as well. They’ve been known to shut down accounts without warning - along with your funds. Also, there ARE merchant accounts that allow for more volume if you shop around - but do so with prudence. Make sure it’s a reputable company. I’d recommend asking around the direct-marketing and infomercial industry to see which companies they use to process large volumes of sales. Good luck, -Chris Posted by: Small Business Merchant Account on December 13, 2006 at 11:41 AM hi, i need your quick help please. if any one knows who offer the credit card processing merchant account in pakistan on the lowest charges. your quick response will be highly appriciated.
Posted by: Salman Raza on February 4, 2007 at 8:52 AM If you want a merchant account in Pakistan then citibank offers it. paypall is with lowest charges buit didn’t transfer funds directly in Pakistan. Third party merchant account who provides payments transfer directly in Pakistan is 2checkout.com. Posted by: Fargahm on April 4, 2007 at 5:25 AM Does anyone know the charges and requirements for merchant accounts in pakistan. a) Anual charges what are other requirements e.g. i am an individual and not a company, can i get it, do i need to have a balance history to qualify? thanks Posted by: Cliqueme on July 6, 2007 at 6:32 AM I think the worst thing in the world would be for my merchant account provider to withhold the payments right now Posted by: Mark on October 29, 2007 at 6:03 PM Yes, I have been involved in the payment processing industry for over 4 years now (canada) and yes, if you exceed your limits on you merchant account profile the merchant account provider will freeze your account until next month, or if you all of sudden do many larger transaction amounts without notify the provider first they then will also freeze your funds to make sure they are not dealing with any fraudulent activities or chargeback scenarios. They are really not trying to be evil, they are just trying to protect themselves from fraud. the best way to circumvent this is to keep in close communications with your provider about the nature of your business sales peaks and valleys. Posted by: Matthew Hunt on December 29, 2007 at 12:49 PM Salman: You may try the Standard Chartered Payment transfer modes. Cheap in price, Easy to use, and secure and accepted worldwide. Posted by: Tina on May 15, 2008 at 10:55 AM Hello, Great article! Yes, it is important to choose a merchant services provider who will be upfront about this and help you to try to avoid it. We set limits when the application is taken and can adjust them later if the merchant anticipates a larger than average sale. Thanks for the topic. Posted by: Gail cavanaugh on July 8, 2008 at 2:50 PM New merchant account for an existing business. We will be selling higher ticket items , actually kitchen cabinets. Is there or are there merchant accounts for this scenario? I would think that the average sale may be betweeen $2900 and $5900, and we hope to sell between 15 and 20 kitchens a month. Any idea’s??? Posted by: John Lopes on October 26, 2008 at 12:02 AM If you have an existing business you shouldn’t have much trouble finding a merchant account. Check with your bank. They may refer you to a merchant account provider, or offer them. Check other places, too, and compare the rates and fees you’re offered. Posted by: Janet Attard |
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Merchant account limits - Check yours now!
Another piece of advice: If you know that you are going to have a large charge that is out of the ordinary, you probably have a purchase order. Send the purchase order to your merchant account provider giving them a heads up that the charge is coming. They’ll probably still hold your funds to verify that the charge is valid, however, the hold time will be a LOT less if you just keep them in the loop.
Posted by: Becky Campbell on November 23, 2005 at 8:09 AM