What to be Aware of and Lookout for with Penny Auction Merchant Accounts

Jun 11, 2015

Penny auctions are believed to have started in Europe. This web phenomenon has led to hundreds of startups looking to jump in on the popularity. Unlike websites like ebay, the merchandise is being sold by the owners of the website, not third parties. In addition, the bidding process is completely unique.

A potential buyer pays a fee for every bid that they make. This fee typically falls within the range of 50 cents and a $1. As the bidding war begins, each bid that is made bumps the price from zero up by a small amount – hence the name, “penny auctions”.

Some have felt that these auctions are the epitome of “if something sounds too good to be true, it probably is”. Many have been placed in situations where they spent much more than they intended to; they left feeling that maybe the deal wasn’t quite as good as it initially seemed. Many who have tried out penny auctions have even compared them to gambling.

Here are some tips on what to watch out for when bidding: 

  • Bid Bots is a program that bids as many times as it takes on a single item to obtain enough money to pay for it, then it is released to a real bidder.
  • Scams occur when the bidder pays for an item but never receives the item that was won.
  • Shills occur when owners, employees and/or friends make bids in order to attract more customers.
  • Spending. Be conscious of how much you’re spending. Similar to a slot machine, you can reach a point where you will never see a return.

We’ve considered what bidders must watch out for when participating in penny auctions, but what must businesses consider when starting out in this industry? The penny auction industry is considered “high risk” by traditional lending sources. Because of this, startups will have a really hard time securing the services they need to get started.

Fortunately, there are providers that specialize in working with business that have been categorized as “high risk”. Consider a penny auction merchant account from emerchantbroker.com, for example. This merchant account will provide the safe payment processing solutions you need to run your business without the hassle of endless documentation requirements and credit checks.

Let us help you get a penny auction 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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