In 2020, any niggling doubts that may have stubbornly persisted over the value of having a web presence and e-commerce website have been removed. In February, 29% of small businesses were planning on creating their websites. Needless to say, with the pandemic that shortly followed, the urgency has only grown. With this sweeping adaptation to e-commerce and delivery capabilities – for larger and smaller businesses, local and regional, alike – the need for stable and reliable credit card processing is paramount.
This is where merchant accounts are invaluable, and understanding that different types of merchant accounts have different capabilities and proficiencies is so important. However, what you might not realize is that you might need more than one merchant account. Unfortunately, more often than not, you won’t necessarily be able to set up more than one merchant account for your payment gateway (the software that facilitates credit card payment processing online). Before proceeding to how you can use two or more accounts and discussing the value of using more than one merchant account, it’s useful to quickly outline the differences you ought to pay attention to.
Product types and risks influence what solutions are best
While there are many elements that come into play and plenty of small print that dictate merchant accounts – the broad strokes are that there are two “types” of merchant accounts. There are standard merchant accounts that most businesses use, that are ideal for the sale of coffee cups or t-shirts. The other type is what is called “high-risk” merchant accounts. The latter is specifically set up to be able to handle challenges that are more common when selling product types that are customizable, age-restricted, or are tightly regulated.
The reason why there are two general types of merchant accounts is that financial institutions need to manage and mitigate their risks when processing credit and debit cards. When it comes to “high-risk” products, there are generally established elements (like chargebacks or fraud) that mean the financial institution takes on more risk when processing payments for these products. As a result, the processing fees associated with high-risk merchant accounts are generally higher than what you’d expect from a more standard merchant account.
What you may be wondering is “why would I want to find a high-risk account if it’s more expensive?” If that’s the case, you’re asking a very valid question, and hopefully you’ll see why below.
Safety is much more valuable than quick processing setups
There are some great benefits to standard, easily acquired merchant accounts. The application process is quick, the set-up is usually easy, and most credit card processing solutions for web platforms like Shopify or Wix will integrate with it painlessly. However, if you’re selling more than one product type that vary quite a bit in terms of risk, then you’re making a gamble that can backfire. If you accidentally got a standard merchant account even when selling high-risk products, like vaping equipment or e-liquid, you’re running the risk of frozen funds or a shut down account. This is a horrible situation to be in, where you won’t have the ability to accept payments online (even if temporary). Worse still, with enough issues, your bank might terminate your account and you might find your business on a TMF (terminated merchant file) or MATCH (Mastercard Alert To Control High-risk Merchants) list – which can effect your ability to start accepting payments in the future.
In other words, it’s invaluable to focus on safety and reliability over expediency when finding ways to process payments on your website. Especially when selling a wide range of products where consumer habits vary greatly, or if there are regulatory restrictions to take into account.
This is where getting more than one merchant account can be invaluable. By using more than one merchant account, you can handle your standard product sales through your lower-cost, standar merchant account – reserving your higher-cost, high-risk merchant account for specialty items or products. That way, you safeguard your ability to accept payments online – while still getting value for money.
Handle more than one merchant account from one login area
It’s true that it’s common for most payment gateways (the software used to connect your merchant account to your website, effectively) to only offer to connect one merchant account per gateway. However, the NMI payment gateway has a unique feature that allows you to integrate two or more merchant accounts to your gateway account. This means that you avoid having to log in and out of gateways in order to manage your accounts properly and access the processing histories and settings when the need arises.
As the increase in e-commerce shopping has exploded over the last 9 months or so, it’s ever more important for you as a business owner to ensure you have the right set-up to handle payments correctly, and safely. Hopefully, the information above has helped you identify whether or not setting up two merchant accounts is the right thing to do for your business.
