Ad Tech NYC 2011 - Merchant Accounts

Ad Tech is definitely one of my favourite conferences, not only do I love being in NYC this time of year, I also love catching up with old friends and seeing what is going on in the industry.

When I ask people if they are going I sometimes get the response that they aren't because its the same thing every year and that there is no need for it. I disagree, I think its important to not only network with your peers (because you can do that remotely) but also to see them in person, maybe meet someone you have spoken to countless times face to face for the first time.

If anyone is going to this show and is looking for a merchant account solution, I would love to speak to you. My schedule on the 9th is pretty booked solid but I will be around the show in the 10th, so if your interested in meeting contact me and lets setup a time.

JR

Merchant Accounts for Credit Repair, Loan Modification, and Debt Consolidation.

If you need a merchant account, either as your primary or as a backup,  for your credit repair, load modification or debt consolidation business, I have a great solution for you. Unfortunately there are a lot of fraudulent companies that have cast this very legitimate business in a bad light. They disappear with their customer’s money, and because of that most bank do not want to touch this type of business.  With all that being said, there are a lot of businesses operating in this space who are legitimate and look to provide value to their customers. If this is you and you need a merchant account, then contact me today and I can get you setup.

We work with a bank who will take this business, and we know that most likely it’s going to be a high volume account, with a high average ticket, but that is fine.

Some of the things we can offer:

Low Rates (relative to the business)

No Volume Cap or restrictions

International Merchant acceptance

Accept and Settle in multiple currencies

Virtual Terminal

If you are interested, contact me today and let’s get the process started.

JR

Denied! What to do if your merchant account is rejected or declined?

Having your merchant account application rejected can be an extremely upleasant (to say the least) experience. You have spent tones of time and money building your website, developing your marketing, working out the relationships with your suppliers and you didn't have a doubt in your mind that you would have any issue with your merchant account. This is something that I hear from alot my clients, they assumed that getting the merchant account would be easy, but there was nothing easy about it.

The first thing you need to look at is what industry you are in and if you are in a high risk sector like adult entertainment, travel services, online pharmacy, escort services, dating, telemarketing, high-volume or multilevel marketing. Not every bank, in fact the majority of banks, will not take this business. One of the biggest value adds that I can bring is that I work with alot of banks around the world I know what banks take what type of business. So, working with me gives you a much less chance of being rejected.

But, what to do if you are:

1. Contact me. Seriously. I will get you a merchant account.

2. Understand the why your application has been rejected, both so that you can better deal with the issue, and so that you are better informed and equipped to move on with your business. There are many reasons why banks accept or decline application, it could be a minor mistake on the application or inappropriate answers. I review all application completed to stop these types of errors before they happen. Some other things that can happen.

Lack of documentation - Didn't send in all the documents required. However if your bank would just reject and not ask you for whats missing its probably a bank you don't want to work with anyways.

BBB (Better business bureau) complaint record

Record of Rip-offs or bad publicity on the internet. Banks are very concerned about reputational risk, so they dont want to be associared with companies that have a history of ripping people off.

Being on the TMF or Match list - see this post here


3. Be completely honest when applying for a merchant account. Tell about what happened with previous merchant accounts, have you declared bankrupcty, etc. This information is used to evaluate your company's risk and I always ask my clients to be completely honest as it allows me to better help them. Its like going to the Doctor, you want make sure they know everythig so they can properly treat you.

4. Slightly modify your business model. Making changes to your procedures and Web site and billing model can help you avoid being classified as a high-risk merchant account or less of a high risk account.

5. Find a reliable merchant broker or consultant. Sometimes (alot of the time) instant merchant account Web sites are scams and it is critical to choose a trustworthy merchant account provider for your high-risk business.

You will also see merchant account providers advertise that they have a 98% rate of approval or even higher, but that is because these companies do something called as a “Pre – Qualification” process on their customers before accepting their application for opening a merchant account, with them. Its just a marketing technique...

6. Create a cash reserve for your business to avoid being denied because of chargebacks. If you have money in the bank or strong business financials the bank will definitely see you as much lower risk.

While your merchant account may be seen as a high risk, there are specific companies and services that can offer solutions. There are high-risk merchant account providers and offshore merchant account programs that use a network of banks internationally. This is who we work with and this is a part of the service we provide. You should spend time focusing on your business, while we get you the best merchant account possible. .

If you can establish what they reasons are for the accoubt being declined, you will be better prepared to for your next move. Learn from your errors, so that you will have more success in the future, whether it be with a new application to a different bank, opting to work through a merchant account provider, or trying to set up an offshore merchant account.

If you have been declined, contact me for possible solutions. There are no additional costs to work with us, as we generate revenue from our partners and because of the volume we bring them, the pricing you would get with us would probably be lower then if you went direct.

If you have any questions, don't hestiate to contact me.

JR

We help banks become offshore acquirers.

One of the many things that really seperate us from others is that we don't only provide our consulting services to merchants, we work with a quite a few banks to get going and starting to process for online companies. Currently we are workig with a bank in Europe, a bank in Asia (Taiwan) and a bank in the Carribean who are new to international processing.

These banks are run by bankers of course, so they don't have the experience or background when it comes to medium to high risk ecommerce processing. We do.

We help them set up procesing relationships, we help them with their underwriting policies, we help them with their reporting, we help them manage their risk/exposure and we will help them determine pricing/revenue models.

Because of this unique relationship with banks globally, we are able to place business that nobody else has. We have some unbelievable relationships with banks that have been processing for years, but we also have "virgin" banks.

So, if you are a bank and you are looking to start in acquiring, get in touch. We can definitely help you out. If you are a merchant looking for some "different" processing solutions, we can help you there also.

JR

Consultant vs Agent. How do we differ in the high risk processing business

When speaking to prospective clients, sometimes I am asked "are you an agent?" and the answer to the question is no, although there are some similarities, it's quite different.

Agents basically act as sales arms of ISO and/or credit card processors. Having worked at one of the largest processors I came into contact with alot of agents. The way an agent typically works is they will get an application from a prospective merchant. Then they will shop that application around to all the processors/ISO's they have relationships with, and hope to find a home. Then they are done.

What we do is very different. We work with a select few processors who we have very strong and longstanding relationships with. I prefer to work with less partners, but with those who I know can deliver. However, not everyone is strong in all areas. For example some have great solutions for dating, others for adult, or pharma....the list goes on. We know exactly who is strong where and that is where we place the business.

The biggest difference though is the extra value that we add through our consultation. We know the rules, we know what works, we know what will help with chargebacks, we know the tools and we know what works and helps other clients of ours. We share that with you. We will help with chargeback reduction, we will help with banking redundancy, website compliance and much more.

So, not only do we setup the merchant account, we also will help you manage it. I am strong believer in letting you focus on what you do best, which is grow your business. Let us manage the merchant account for you. Let us be your advocate.

We have no interest in just shopping deals around, we look to build longterm partnerships and we are constantly looking for new solutions that will help you. Whether its high or low risk, offshore or domestic - this is what we love and this is what we do.

I don't want this post in any way to be seen as negative towards agents. I have worked with many, they are sharp and know the business. Some are extremely successful and alot of ISO/processors rely on them for new sales. We just take a different approach.

One problem I do have with agents, is when too many people are in the middle. Meaning, you have an agents, who passes a deal to another agent, who then passes the deal to either another agent or the final processor/iso. You run into issues where there are too many layers, too many people involved and nothing gets done. We only work with people who are direct to bank or directly with the bank itself.

In the high risk processing business, you never know what can happen. Your account can be shut down, and if you lose your processing you are in big trouble. Could end up on the TMF list or worse, fines. Our goal is to make sure you are always running and have the best possible options at your disposal.

If you have any questions about how we can help you, please do not hesitate to contact me.

JR

DDDD (Daily Deal Dynamic Descriptor) helps reduce chargebacks and customer service overhead

At Social App Merchant we are always looking at new ways to leverage technology to improve the way our customers operate their business. Daily Deal websites are a big part of our business, and although the industry is in its infancy, we are definitely one of the payment service providers who have quite a lot of experience in dealing with these clients. In previous articles I discussed if Daily Deal websites are high risk, I don't believe they are and that is because I know what the best practices are for ensuring chargebacks are kept in check. And, with all my clients in this space I like to work with them to ensure they are in compliance with these best practices as its beneficial to everyone.

Back to how to leverage technology, we have introduced functionality that allows a daily deal website to pass through name of an actual deal to appear on the credit card statement descriptor, and not just the deal site and customer service phone #.


A merchant descriptor looks something like this:

DAILYDEALSITE

Dynamic descriptor gives the merchant the ability to control the descriptor on the credit card statement of the customer. Adapting this feature to our previous example, we get:

DAILYDEAL*GreenSpa

The “GreenSpa” would be information that the Daily Deal website would be passing with the transaction .

As Daily Deal websites grow in popularity, we are seeing that consumers are making many purchases at the same deal site on a monthly basis. They may see three charges from the same site but may not remember they made those three purchases. Also, they could have purchased several deals across two or more daily deal websites. By implementing daily deal dynamic descriptor (or DDDD - I like that!) functionality, your customers will know exactly what each charge is for. This will reduce the number of call center and email inquiries you receiver as well as reduce chargebacks.

If you are a Daily Deal website and would like to learn more about this, contact me! If you are looking for a processing solutions, we can definitely help there. Take a a look at www.socialappmerchant.com for information

JR

Terminated Merchant File, TMF, Match List. How to get on it and what to do if you are.

There are some lists you want to be on like a VIP list, a guest list, or a Christmas card list. But the TMF is one list that as an online merchant you don’t want to be on.

I speak with Merchants all the time who have been placed on the list, and usually I am able to get the a merchant account, offshore, as long as they can provide a letter the shows why they ended up on the list, and what steps they are taking to ensure they don’t run into the same problem again. The banks are I work with are open to this and understand that not everyone on the list is bad. So, being on this list is not a death sentence, but it can definitely suck. If you are on the list, and you need help, contact me and let’s evaluate the situation and let me help with solutions.

Getting back to the list, let’s start with the basics. What exactly is the TMF or Match List? The Terminated Merchants File (TMF) or match file is basically a list of merchants that have had their merchant accounts closed down by their processing bank on negative terms. If you are placed on the match file, you, any partner of your business, your business itself, and possibly anyone at your address can not sign up for a merchant account with a US based processing bank. Processing companies take the match file very seriously.

When you apply for a merchant account, the bank or processor will check to see if you are on the Terminated Merchant File (TMF). If you’re on it then this sends up a red flag to banks that you’re a credit risk. The chances are slim to none of getting approved once your name hits the list. Getting on the TMF list is the equivalent of getting blacklisted. However, as nice as it would be to say that that every business that is placed on a terminated merchants file deserves it. It’s absolutely not the case.

Now, how can someone get on this list you ask….well unfortunately, its not that difficult, the challenge is getting OFF the list, even if you didn’t deserve to be on it. Here are some of the most common ways of ending up on the list.

• Credit Card Fraud. If don’t have strong enough fraud control and detections, you can end up with way too many chargebacks.
• Friendly fraud. This is when a consumer disputes a legitimate charge such as from an adult website.
• Factoring. Factoring is when a merchant deposits transactions for sales generated by another business.
• Excessive chargebacks-approximately 1-2% of sales.
• Deception Marketing and Fraud. Types of fraud include not delivering products or misrepresenting products or services.
• Violating the terms of your merchant agreement
• Owing money to a bank or processor

Also, keep in mind that because of your merchant account provider, you could wind up on the TMF if your provider counts chargebacks in the month it comes in instead of the month the original transaction occurred. If you do fewer sales in the month the chargeback is processed, your chargeback percentage could skyrocket, and you end up on the list.

Regarding the last point above, owing money to the bank or processor – one of the easiest way to get on the list is to close your contract with a merchant provider and not pay your final bill. This is basically a guarantee you will end up on the list. Your final bill includes any processing costs that you owe, but also includes any monthly, yearly, or termination fees that were specified on your merchant contract. You are also liable for 6 months past the settlement date of the final transaction that was processed on your merchant account. The settlement date is defined as the date that the service or merchandise was fully delivered to and accepted by the customer.

How to get off the list, like I mentioned above is very challenging. Basically, the only company in the world that can get you off the TMF, is the company that put you on it. It does not matter who you talk to, what they promise, who they are, or anything else, it always comes down to the company that put you on it. Businesses usually learn that they are on the TMF when they try to open a merchant account with another company.

The company that puts a merchant on the TMF is the processor that is taking on the risk of allowing the business to process with them. These are often the back end companies that you may have never had any personal contact with. Merchant Service Providers and resellers are not normally the companies that can put a merchant on the TMF, unless they are taking on the risk of your credit card processing, so calling them may have no effect, but regardless, the company you signed up your merchant account with is who you should contact first. As soon as you find out that you’re on the TMF, call your merchant account provider-or the company that placed you on the list. Prepare to work to speak to many departments until you get in touch with the right person. You might end up being referred to the processing bank.
Depending on why you are on the TMF, it can be easy to impossible to get off the TMF. If you are on it for committing fraud yourself through your own merchant account, don’t count on ever getting off. Processors do not like fraud in any way, and if you as a business owner were the cause of it, they will not ever want to provide services to you again.

If you believe your business or name was mistakenly added to the Match file, you must work with the acquirer that added the listing to the file. Only the company that placed you on the list is authorized to request a change or deletion of the information.

If a business was placed on the match file for a high chargeback ratio, time is normally the only thing that will get the business off. The processor needs to know that they aren’t going to get stuck with any unanswered bills from the merchant’s former customer’s Chargebacks.

If you didn’t pay your final bill, it may just be a matter of making good on your debt with your former processor. I have seen this as low as a few dollars, and the merchant was removed about a week after they made payment.

Unfortunately the majority of the time it is not that simple to get off the match file. It normally takes several weeks to get off the match file. Sometimes it takes negotiations to get charges cleared up, or fees removed. At this point every case is unique. If after a few weeks you are not making any headway, you may need to consult a lawyer. Processors normally use a system called arbitration to avoid taking individual cases to court. It is cheaper than going to a court, and the results are often better for both parties.

Here are some tips for staying off the list:

• Don’t go over your processing limit, if you think you are going to speak to the processor first.
• Don’t use any deceptive billing, be upfront with customers about charges and when the charges occur. Always provide easy access to customer service.
• Have the customer service number on the credit card descriptor. You want them to contact you before the bank.
• Always provide top notch customer service and make sure there are open lines of communication.
• Monitor your transaction closely, if something appears out of the norm then investigate immediately.

If you have any questions about this posting, or how you can get processing even while being on the TMF list, please do not hesitate to contact me.

Merchant Accounts for Online Dating websites and ways to mitigate the risk.

Typically, online dating sites that offer monthly memberships and especially those that offer free trials are considered high risk. The reason being that most banks and processors don’t want to deal with the high refund rate and chargebacks that are typically associated with this business Of course, that is not true of all dating sites as I am sure most would love to secure e-harmony’s business. But what I see a lot of these days are dating sites that are niche specific or have some other distinguishing factor (like being free). I have worked with quite a few dating sites and have helped them secure both domestic and/or offshore processing and at the same time helped them resolve the inherent issues of the business.

Dating websites do tend to have a significant amount of volume, which in turn equals higher chargeback’s, so you should definitely work with a company that understands this business AND has experience. Issues will come up and having a company that will work with you through the problems and not just shut you down is important.

In its simplest form, online dating is a way for people to make contact and communicate with the entire point of this to get an understanding of each other with the hopes of meeting in real life, if both parties feel comfortable in establishing a sexual or long term relationship. Its estimated that in the US alone, over 600 million is spent yearly on online dating.

So, besides the high volume and high chargeback/refund potential, there is also the possibility of fraudulent activities – which makes online dating processing high risk. Some examples of Fraud that has taken place is prostitution being advertised on the website. Also there are a bunch of scams that are being run, here are some recent examples:

“The woman who used a dating site was contacted by a person claiming to be an American soldier called Lt Brian Rivera.

After engaging in conversations over a month, she sent nearly £4,500 to an address in America, supposedly paying for flights for the soldier to come and visit her in Britain.

However, he failed to arrive and when she re-contacted his ‘site’, another soldier, Lt Troy said that he had been kidnapped and there was a £5,000 ransom.

At this stage the victim realized she had been ‘scammed’. “

I would advise a website to make it a point to tell their customers that sending money to someone they met online, but haven’t actually met in person is a VERY BAD IDEA. You would think that this is common sense, however its clearly something people do quite a bit of. Another example:

“Police say they woman was swindled out of nearly $13,000 by a man from Malaysia, and she's probably not going to get the money back.

The scam was reported to police last weekend.

Police say she met the man through a legitimate online dating service and developed a relationship via emails, text messages and telephone conversations. The man said he was having "financial difficulties" and she wired him money over several months.

Eventually he stopped contacting her and she discovered that his email address and telephone number were no longer in service.”

Prostitution scams are usually straightforward; they put profiles up on dating sites to get business. These profiles are usually recognized by sleazy names but, how do you combat all of this.

Here are some tips:

1. Consider using 3D Secure and AVS. Some people argue that this can decrease conversations and they may be right, but the alternative can be much worse.

2. Work with a 3rd party company that can help you review and moderate profiles on your website – contact me for recommendations.

3. Encourage your members/customers to report any scams or potential fraudulent behavior to you.

4. Work with a processor/company has different risk/threat tools that you can use. For instance IP checking, so you can block potential fraudulent activity based on parameters you set. For instance, a US credit card cannot be used at a Russian IP.

5. Examine your traffic sources and see if you are getting a higher fraud/chargeback rate from any source in particular. Its much better to have good quality traffic that you pay a premium on from a reputable source, then cheap traffic that is causing you a lot of headaches.

As always I am here to help. If you are interested in exploring options for a dating merchant account, have questions or even your own recommendations - contact me.

Offshore Processing for Internet Marketers

When I speak to a lot of internet marketers and bring up the option of processing business offshore, I am told (in a lot of cases) that they are not interested in offshore and they only want a domestic solution.

I am actually not 100% sure of the reason but one thing is for sure, offshore processing has much worse reputation in the Internet Marketing industry then it should. A lot of the time setting up offshore is exactly what a merchant needs to do, at least for the time being. One of the major benefits to processing offshore is that it provides you with much-needed flexibility and can really help if you are having any chargeback issues. I would be happy to speak in much greater detail with anyone that is interested. Contact me anytime.

The fact of the matter is, the offshore banks that I have worked with are all established, have a very good understanding of ecommerce, and are very easy to deal with it. If the image that you have of working with an offshore bank is that of a shady organization, operating out of a small office, in the middle of some backwards country, then you are wrong. I have seen some of the operations, and they are impressive to say the least. They are banks, they are regulated by the associations they belong to, and a lot of them understand ecommerce better than domestic banks.

What I sometimes suggest to my merchants (especially those in the online marketing space) is that they should have both domestic and offshore processing and once they setup, it’s easy to understand why. Yes, you will pay slightly more for offshore processing, but would rather pay a slightly higher premium to ensure that you are always up and running, even if you encounter some slight chargeback issues.

And lets be honest here, even if you run a 100% complaint operation, if you are running any type of trial offer you will have customers that forget to cancel, will complain and you will get Chargeback - and the difference between offshore and domestic chargeback thresholds is significant. This is a HUGE advantage of going offshore and I think it’s a better option than the IPSP model.

One concern that a company may have with going offshore is the requirements to incorporate in that jurisdiction. That is understandable if its something that you have never done before, but it’s really not a complicated process and it’s a process that any processor with experience can walk you through. There may be some slight additional costs, but the benefit of ensuring your processing is up always definitely outweighs that. Contact me if you have any questions about setting up an offshore account.

I think that getting comfortable with Offshore is something that comes with experience. I do have quite a few merchants/offers processing offshore, and I think that these days anyone with substantial volume that offers a trial is starting to see this requirement. Adult merchants have been processing offshore forever, and they definitely see the value in it BUT its important to note that you need to work with someone that has experience because you don’t want to get burned, have the bank blow up and hold your funds.

Some quick benefits

- Usually allow for more volume/no cap
- Higher chargeback threshold
- Potential for multiple currencies
- Higher chance for approval.

If you have questions about Offshore Processing, or would like to talk to me about setting up an account then get in touch.

JR

Are Daily Deal websites considered high risk?

Daily Deal websites are something I know quite a bit about as I work with some of the largest Daily Deal websites around. These guys process a significant amount of volume and quite honestly the chargebacks are extremely low considering the volume. So the question is, why in speaking to some companies, do they tell them that domestic processors are not willing or want to their business because it’s too high risk?

A few answers to this question.
1. They don’t understand it.
About 1 year ago, when the larger sites were just starting out, this may have been a good answer and a few of my clients had to really sit down with processors and explain the concept. If you get this answer from a processor today, then they shouldn’t be in this business. Anyone who doesn’t understand this business has been living under a rock.

2. There is a fear of high chargebacks from customers who aren’t happy with service they received.
If that is the case, then this is not a merchant that I would want to work with either. The Daily Deal websites that will succeed are the ones who place an emphasis on customer service. If a customer is not happy, then refund them. You would rather have that customer come back and be happy with the service they received, then not and of course you don’t want the chargebacks.

3. The merchant can go out of business after they sold all the deals.This is a risk that you have to take, but all these larger deal companies do their due diligence on the merchants to see if they can handle the huge influx of customers they are going to receive. I wouldn’t want to work with a deal company that will just take anyone, I will want to see their contract and how they board the merchants.

I do not in any way consider a daily deal sites high risk, as long as the people behind them are in it for the long term and are looking to build a sustainable business. Right now we are placing daily deal sites domestically at GREAT rates both in Canada in the US. For some of the larger sites we have merchant accounts at both a Canadian and US bank, and NO ISSUES AT ALL!

I strongly believe that the top guys will stay the top guys but there will be smaller sites that focus niche industries, which is definitely something we are seeing now.

As always, I am here to help if you are looking to place this business. Hit me up


JR

Who is Jared Ronski?

My name is Jared Ronski, and you are probably asking yourself why does this guy have a blog and why am I reading it.

Well to give you some background on who I am, I have been in the payments industry for over 7 years in various capacities. I started off working in prepaid, helping companies disburse funds around the world. I worked with MLM companies, companies paying affiliates, and gaming companies just to name a few.

After prepaid, I got into the payment processing business - helping merchants accept payments (primarily credit cards) online. I work with both Low Risk merchants as well as High Risk merchants. The typical merchant I enjoy working with the most is the high volume, experienced, internet marketer. I find that its fun, interesting and its an area that I really enjoy.

The purpose of this blog is to really discuss the issues facing internet marketers, talk about strategies to overcome them, look at what is working and what isn't , and hopefully I can help people along the way.

Any feedback to the site is greatly appreciated, and I look forward to speaking to anyone who would like to know more about what I do.

thank you,

Jared