Sometimes offshore high risk merchant account providers aren’t what they appear to be. We’ve been in the high risk credit card processing space since 2001, and the landscape continues to change and evolve with new regulations, set forth by the major card issuers and governments. Staying on top of these changes is paramount to remaining relevant in high risk payment processing.
Hence, merchants seeking a change in payment service providers is more common today than ever, simply because the environment is more challenging.
Why merchants want to change offshore high risk merchant account providers
The reasons can be many. They can be complicated. Or, simply, the merchant thinks s/he can get better rates, service and options with a change in offshore high risk merchant account providers.
- Too few solutions: Perhaps you’ve outgrown your payment service provider (PSP), who cannot offer the effective solutions for which you’re seeking.
- Expand to other countries and regions: You’re strictly a domestic merchant, but need an offshore merchant account solution to expand and accept more transactions from other countries. (Multiple merchant accounts could work here).
- Seeking company registrations: With new regulations by the European Union, merchants are now required to register their businesses within the EU. Some PSPs can accomplish this for you better than others.
What’s involved when changing providers?
Our first piece of advice is the most important without question. While a merchant may not be satisfied with his/her offshore high risk merchant account provider, we strongly advise – keyword: strongly – that their first course of action is to read through the merchant account contract with a highlight pen to accent the key details.
We get it; it’s a boring read. However, it is short term pain for long term gain for merchants seeking a new provider. From our viewpoint, merchants may find a few hazards:
- Withheld rolling reserve: Per the details of your contract, monies you may have tied up in a rolling reserve may not be recoverable from your payment service provider, should you vacate the contract. For better or worse, this is a common practice.
- Withheld funds: Some banks may hold your funds, using the binding contract as its reason. Other banks may hold your funds, yet release them in increments to cover for any impending chargebacks or refunds that occur.
- Early exit fee: Early exit or early termination fees can also be applied should a merchant choose to sever a relationship with a merchant account provider. Again, it is a standard practice in payment processing simply because acquiring banks and merchant account providers need to protect themselves.
The penalties for opting out of a merchant account contract differ from bank to bank, but can be severe. We recommend taking the safe route – reevaluate your needs while seeing out the terms of your contract. For merchants who wish to open an offshore high risk merchant account, perhaps your PSP has a partnership with another provider that can accommodate you (enabling your PSP a share of revenue).
On the flipside, a surefire way to maintain merchants…for good
If we had to give one piece of advice to our competing offshore high risk merchant account providers regarding losing merchant clients, it is this: Forge partnerships with other PSPs and gateways.
About a year ago we attended a large tradeshow where one of the keynote speakers declared the way to move forward in payments is to make partnerships with banks and gateways in other regions of the world. He reasoned that payment solutions differ from country to country, region to region. For example:
- Credit cards and cash dominate the way U.S. consumers pay for goods.
- European consumers – particularly in France and Germany – largely prefer debit cards and cash.
- South American consumers prefer more localized credit and debit card schemes.
- In India, cash on delivery remains the most popular (though change is happening).
Not every PSP can accommodate every payment schemes throughout the world. Making partnerships with such providers, however, can give your solution a broader, stronger range and impact. It is fast becoming the way of the industry.