Silk Road, the black market online marketplace was recently shut down by the FBI, and its operator was arrested in San Francisco, CA. The story has been trending on the Internet. Most people were unaware of the website, which was an online marketplace similar to eBay or craigslist, with one major difference. The site was openly selling cocaine, LSD, crystal meth, and more. The site even provided a marketplace for professional hit men, fake identification, and other illegal information.
The story has been making waves in the electronic payment industry because Silk Road used Bitcoin to conduct business, the controversial digital currency. Bitcoin has become popular because of its anonymity. The currency has a fluctuating value, just like any other currency. At the time of this article 1 Bitcoin was trading for $192.40 US.
While Silk Road demonstrates the dark underbelly of Bitcoin, the currency does have legitimate uses and is championed by e-commerce giant Amazon.com and many legitimate websites use the digital currency to conduct business.
The future of Bitcoin is uncertain, and the recent news surrounding Silk Road does not bode well for the controversial currency, however many analysts in the payment processing industry believe the currency or some similar form of alternative payment is here to stay.
High-Risk Merchants Turning to Alternative Payments
Many online businesses are deemed “high risk” by the electronic payment industry. In order to process electronic payments, these websites need a high-risk merchant account. High-risk merchant accounts can be difficult to obtain depending on the business model or website. Merchants are looking to alternative forms of payment, like Bitcoin and closed-loop stored value programs.
Merchants may also use an “aggregate” account to process payments. These aggregate accounts, provided by registered PSP have different restrictions depending on the PSP offering the account. Some accounts may come with delayed funding of up to 30 days, while others may keep 25% or more of the merchant’s funds in a reserve account. Aggregate accounts are not recommended for merchants doing over $20,000 US in monthly sales volume.
eMerchantBroker.com, the Nation’s #1 rated provider of high-risk merchant accounts offers a variety of alternative payment solutions for merchants having difficulty securing a traditionally high-risk merchant account.