How to get a safer and more cost effective merchant account

I remember when applying for a merchant account was easy.

We walked into our local bank, filled out a form, and walked out with a new POS machine. If we were lucky we even got a coffee. If you manage a brick-and-mortar shop, the situation has not changed a lot for you. But if you took your business online, and even global, I'm sure you must have had some troubles or at least heard the dreaded word: “compliance”.

The issue with global online businesses is that the government cannot really place the operation as easily as they used to do for physical shops. Many times, there is no clearly defined “office” and locality of the customer base.

Taking online payment opened up a whole new opportunity for scammers who take funds upfront and deliver either nothing or a lower quality product or service than promised. Payers and their source of funds can be an issue too: it’s also hard to determine if the received funds are from legit, taxed sources. Not to mention that being international tackles the complex issues of cross-border taxes and regulations, which is a whole subject on its own. These are just some of the red flags which can cause a headache to the bank. And their headache quickly becomes yours, too.

So, what can we do to make sure our bank is as happy with us and with our business?

1. Clear definition of activities, services, and prices

Make sure your website is as detailed as possible and has all the relevant details, terms, and conditions which relate to the payment. Your product/service shall be easy to understand, the prices shall be clear and fair, and you should not mislead or trick your clients in any way into unfair trades or unauthorized purchases. Many times, the compliance also checks the website for typos and makes a mystery purchase to test your delivery. Misunderstandings can cause a lot of issues for your client who then will complain to your bank – which can lead to closed accounts and even blacklisting for your company.

2. Involve your bank in every major change

Major changes in products or services must be always communicated to the bank which then needs to revise and authorize the change. The new products or services might need a special licence or at least a legal opinion to confort the bank. Think about it: you cannot get a merchant account for a shoe shop and then use it to sell alcohol. The change in your products or services might seem to be too small to care - but better to be safe than sorry. All questions shall be cleared before any payment is taken. If the bank finds out the change without you, or one of your customer complains and gets it right, you can get easily in trouble.

3. Have your documents in order

As you must report any changes in your products or services, you shall do the same for any structural or company changes. New directors, shareholders, and even office addresses must always be communicated to the bank as they need to keep up to date records.?Dont forget the expiry dates for the documents, too! And if the bank asks, you shall provide. Failure to provide fresh utility bills and renewed passports might result blocked accounts.

4. Alternatives and backups

How will it affect the operation if your bank freezes your funds all of a sudden? How much profit is on the line you cannot collect funds from any of your clients for days?

Your operation is taking 100% risk with one bank, which drops to 50% when you open another one. It doesn’t cost a lot to have a backup, but it can cost a lot if you realise you need one, too late.

5. Renegotiate the terms and conditions when you have a bargaining power

Such as risk, the related banking fees many times are subjective. But banks are also profit oritented and they doesn’t want to lose a good customer.

Maybe you started off with higher fees as a startup because your bank did not want to take the risk with you for cheap. But a few months later when you bring good volumes, and you proved yourself with no complaints, the bank migh be open to renegotiate the fees and other terms and conditions in your favor, just to keep you onboard.

6. Never miss an opportunity

Maintaining a good banking relationship is not easy in this ever-changing world. Your company and volume grows, you introduce new products or services, while the banks’ risk appetite shifts. Keeping up to date with the changes is vital to succeeding in this competitive world. Payments are where your business profit starts, so an in-house or an outsourced payment expert can save you a significant amount of risk, time and cost in the long run.

How can PSP Angels help

PSP Angels Group is an independent payment consulting firm.

We understand the payment market and have a huge network of different banks and financial providers, so we can give?our?clients an accurate picture of all the different payment and banking options.

We know the payments market’s ever-changing risk appetite and licensing requirements, as well as what fees are currently offered. We help?our?clients make informative decisions about the possible options, prices and risks.

Within?our personalized payment consulting services, we set up an overall payment plan, help to move funds between countries, reduce real banking and payment risks, re-negotiate current fees to match the lower market rates, optimize tax and cash flow, and assist with the overall payment/banking setup.

Helping?our?clients to take their business globally, we explain what country uses which types of payment options and we also refer them to local payment providers for safer and cheaper banking and financial products. We have several partners who offer payment solutions, alternative payment methods, mobile payments, wallets, open banking, vouchers, crypto payments, chargeback and fraud tools, cashiers, and correspondent banks, based on individual circumstances and needs.

Our Cyprus?branch offers?various?fiduciary, accounting, taxation and audit services, where we assist companies not only during their operation, but also from incorporation, including company setup, licensing (office and personal setups, executive and non-executive directors, AML officers, lawyers, software providers, correspondent banks etc.)

Our Malta?branch offers?banking and payment consulting, aimed specifically for the iGaming and Gambling industry.

Via?our new Greek?branch, we now offer in mergers and acquisitions of financial licensed companies such as brokerages, crypto exchanges, banks, E-money institutions, small payment institutions, money service businesses insurance, and remittance companies, etc. globally

We also specialize in payment and financial evaluations on different projects to assist.

In 2023 PSP Angels won the Payment Consultants of the Year 2023 award by Acquisition International Magazine https://www.acquisition-international.com/winners/psp-angels-2/