Merchant Account for Online Gaming
Online gaming merchant account demand has been on the rise over the recent few years. This can be attributed to the growth in the online gambling space. According to a recent study, the online gaming market is projected to grow by $142.38 billion between 2021 and 20226. This will reflect a 37% growth all factors remaining constant. With such a huge potential, it is understandable that many people are interested in investing in the market.
The biggest bottleneck to running an online gaming business is having access to a reliable merchant account. This post explores steps you can take to get an online merchant account for your virtual casino. Below are the key features you must look for when sourcing a merchant account for the online gambling business.
- Should have multi-bank processing capabilities, including offshore processes
- Should provide a safe payment away
- Should provide a way of dealing with chargeback disputes
- Ideally, the account should support ACH and Check 21 processes
- Should offer competitive rates
- Should have a proven approach to fraud protection.
What is an Online Merchant Account?
When a person chooses to venture into an online business or a business that requires digital payment processing, a merchant account is needed. In simple terms, a merchant account is a bank account that accepts payments made electronically. When customers pay for products using their phone or credit cards, the seller can only receive the payment via a merchant account.
What is the Big Deal with Merchant Accounts?
While most people can access all types of bank accounts, there is a big problem when it comes to opening and running online gaming merchant accounts. The reason is that they are termed “high-risk accounts.“ Few mainstream banks are willing to allow their customers to run online gambling business accounts due to the nature of the business.
Online gaming businesses carry out high volumes of transactions in small amounts. Such transactions can be quite risky to the business and the bank. These small transactions can result in high amounts of chargebacks, a situation that exposes the bank to high risks. Even so, there are many third-party entities that have made access to online gaming merchant accounts possible.
How do I Set up a Merchant Account Online?
You can set up your business merchant account in seven simple steps. The steps followed for setting up an account for online gaming are similar to the process taken by other businesses. However, there are a few bottlenecks that online gaming businesses must navigate in the process. The steps to follow in string up the merchant account are:
- Acquiring a business license
- Opening a bank account
- Evaluating Business needs
- Reviewing merchant account providers
- Completing an application for a merchant account
- Submit a signed underwriting
- Getting the account
1. Acquiring a Business License
The first step you must take is registering your business. Merchant accounts are only issued to licensed businesses. As long as you are operating a legal business in your territory, it will get a license. The license will be required for up application for a merchant account.
2. Opening a Business Bank Account
Once you have acquired a license for your business, open a business bank account. There are many reasons why you should have a business bank account separate from your personal account. In opening a business bank account, you may be required to provide your business license as well. This bank account is opened from a physical bank and operates in a similar way to your personal account.
3. Evaluating Business Needs
Once you have a bank account and business license in place, now review your business needs to determine the type of merchant account needed. This step is important since different merchant account providers offer different features. Knowing your business needs in terms of income flow and other factors is necessary. Find out how often you will receive payment and the number of payment options you intend to issue alongside other factors.
4. Completing an Application for a Merchant Account
At this stage, you have everything you need to apply for your merchant account. Follow the provided guidelines based on the merchant service provider. Fill in the merchant account details as required and provide the necessary documents.
5. Submitting a Signed Underwriting
After filing all the required details, you must provide a signed underwriting. This document details that you understand the risks involved in running a merchant account. For those running high-risk businesses such as online gaming, the business process is explained to you well. You make the commitment knowing well that such accounts could result in losses.
6. Getting the Account
Once you have submitted your details and signed them, they undergo review. The merchant provider has to review the risk level of a business before issuing a merchant account. New high-risk businesses such as online gambling may have a tough time in this section. To get passed this hurdle it is recommended to apply with merchant providers known to favor high-risk businesses.
Once the details are approved, the merchant account is made available. Most merchant providers process the account in a period of one day and one week.
What is a High-Risk Merchant Account?
An online gaming business merchant account is a good example of a high-risk account. A high-risk merchant account is one that has been classified by merchant account providers to be exposed to high levels of fraud which could result in high chargebacks. Whenever a person opens a merchant account, it must be reviewed by the account providers. The merchant account provider determines the risk level of an account and hence sets the processing fees.
Can You Have Multiple Merchant Accounts?
The simple answer is yes, you can have two or more merchant accounts. The complex answer is that it depends on the details of each account and the reason for needing to have more than one merchant account. Normally, most traders will opt for multiple accounts to solve two key problems:
- The need to spread risk
- The need to diversify payment options
Using Merchant Accounts to Spread Risk
With high-risk ventures such as online gambling, it is mandatory to spread the risk. This means that you could simply lose plenty of money if the merchant account providers choose to block or suspend your account. When you have multiple accounts, your business will keep on running even when you are served notice by one account provider. Further, the chargebacks that could occur are normally spread to the account operators, reducing the risk incurred.
Using Merchant Accounts to Diversify Payment Options
The other reason you may want to use multiple accounts is to have as many payment options for your customers as possible. There are some merchant account providers that only support one credit card. For instance, if you find one merchant account provider that only supports the use of MasterCard, you may want to use a second account that supports Visa cards. This is one way of ensuring that your customers always find a way of paying for the products.
Where to Get an Online Gaming Merchant Account
Ideally, you could go anywhere for a merchant account. The only problem is that you can never be sure of running an online gaming merchant account without exposing yourself to high risk. If you are looking for an online gaming-tailored account, you must work with a merchant provider that has a track record.
Thankfully, we are here to sort you out. We have been in the market for a long time and offer online gaming tailored merchant accounts with the best processing fees.