Before you sign an agreement with a merchant account provider, it is important you understand some of the terms of the agreement. One area that is creeping into this domain is a reserve on the account. These are becoming normal on a high-risk business option.
Some businesses through no fault of their own are high risk. This means a judgment made as to their type of business, normally associated with a high rate of problems and chargebacks, but it can just be on the area of business.
Some high-risk businesses are because of credit problems the business has experienced or of the owner in their personal life. However your business is classified, a high-risk business can put pressure on the merchant account providers and some of the mainstream banks won’t take the risk.
Nevertheless, you still need a merchant account provider and if you are high risk, you must seek out a merchant provider who specializes in high-risk businesses. If they put a reserve clause into the agreement it will mean the merchant account provider is able to withhold some of the sales money made in an escrow account, this will cover the expense if there is a chargeback or problem on the account.
It is therefore important that you check the policy carefully if you are considering taking out a merchant account. Not all merchant account sales teams will understand the reserve and it is important that you discuss the full agreement and understand if such a clause is going to be included. Ask the underwriting team for advice on this matter before signing.
However, it is possible to find a merchant account with no reserve and still have great rates too. Therefore, before you sign any contract information with a merchant account provider, make sure they are not going to charge you money or hold on to a percentage of your sales in reserve for any length of time. Choose a provider who understands the pressure of business and the need to deliver the perfect merchant account options to meet the business needs.
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