Payment Providers are Changing Rules: Is Your Money Safe If Payment Processing Hits Rock Bottom?

Aug 25, 2020

Merchants who process payments through acquirers and payment processors must worry about what would happen if payment processing faces hiccups.

While losses are unlikely, the current COVID-19 recession has had negative impacts even on large financial institutions like banks and may cause panic among merchants who rely on them for various services.

Payment processors are now tightening rules and making unprecedented changes that could put your business at risk.

Qualpay, for instance, has stopped processing transactions for merchants in high-risk categories. Square, on the other hand is holding back 30 percent of payments processed for specific merchants?

Many other processors are making moves that might affect how you do business. While such news are enough reason to panic but, businesses must recognize that this isn’t the first time the payment world is facing such disruptions.

So what’s the worst that could happen?

With payment companies taking extreme measures, business that fall on the wrong side of the new regulations may suffer frozen funds.

While many businesses will be affected, risky industries will likely feel more heat than other sectors.

Merchant categories like subscription boxes, digital products, adult entertainment, CBD dealers and forex will suffer most.

Affected businesses will receive an email explaining the changes in regulation that might lead to contract termination.

This situation can disrupt your business a great deal, especially if you rely entirely on a single merchant account and payment processor for all your business dealings.

How Merchants Can Survive a Chaotic Payment Environment

While a business can’t do much about regulatory changes and contract terminations, merchants can improve their chances of surviving and growing in a chaotic payment environment in the following ways;

Multiple Payment Options

While credit cards are a staple, they are not the only way to accept customer payments. Merchants can try alternatives like ACH processing and cryptocurrency payments.

These avenues come with extra benefits such as reduced chargebacks and affordable payment processing.

Bank Accounts versus electronic Wallets

You want to embrace traditional bank accounts for one reason; unlike e-wallets, they won’t bombard you with the sudden news of a closure.

It is okay to go digital, but is safer to store your finances in long-established banks that won’t liquidate and run out business in an instant.

Hammer out a Lower Reserve

Reserves often reach 20 to 30 percent depending on your payment enabler. To hammer out a lower reserve, a business must reduce chargeback levels and maintain a desirable ratio for three to six months.

Final Words

Take quick steps to protect your business in a shaky payment ecosystem. Implementing today will not only push you through COVID-19 but also open new business opportunities in the future.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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