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The merchant account is a dedicated bank account that can be opened in the acquiring bank. Its purpose is to receive payments from online shoppers, allowing payments to be accepted from various payment systems, including VISA, MasterCard, and others. In other words, the merchant account is a bridge between the customer using the debit/credit card and the seller offering goods or services via the Internet. It’s an integral part of the modern online business infrastructure, providing convenience and safety for financial operations in the digital environment.

How the merchant account works

1. Payment authorization: When the client makes an online purchase, the merchant account allows the seller to request approval from the bank to withdraw money from their customer’s card.
2. Transaction processing: After the payment is accepted, the funds are transferred to the account in the acquiring bank (the bank that services the merchant account).
3. Funds transfer: The money is transferred to the seller company’s checking account according to the schedule.

There are two major merchant accounts:

1. Low-risk merchant accounts are most suitable for retail enterprises, services, or digital product-selling companies.
2. High-risk merchant accounts are suitable for businesses considered by banks to be riskier due to the higher risk of chargebacks and potential complications for the bank. Examples of high-risk business spheres are online gambling, Forex trading, ticket sales, tourist services, etc.

Choosing either one of these options depends on the business features. Companies that work in the higher-risk scopes of activity benefit from working in niches with higher profit margins. Traditional companies benefit from better banking proposals, but they have less flexibility in some other aspects.

Banks usually impose strict criteria for clients involved in high-risk activities. To establish a company’s merchant account, a valid checking account that will accept payments is necessary.

The application process includes providing detailed information about the business owners and submitting notarized copies of the incorporation documents. A good credit score is vital for companies with a long business history. The bank also expects a well-developed business strategy, including financial forecasts. The applicant must clearly explain their chargeback policy and demonstrate the business’s economic stability.

Qualified lawyers can significantly simplify opening a merchant account and increase the chances of a successful result. IT-OFFSHORE offers expert support in this matter. Our specialists have extensive experience setting up online accounts for various businesses, including high-risk sectors.

Crypto-processing as an Alternative for a High-Risk Business
Many companies operating in high-risk sectors often face rejections from traditional payment providers. Сrypto-processing can be an excellent alternative to a classic merchant account in such a case. Crypto-processing is a payment processing system that allows businesses to accept and process cryptocurrency transactions. The core principle of crypto-processing is decentralization, which ensures high security and transparency for all operations. Overall, crypto-processing is an advanced technological solution that transforms traditional concepts of financial operations.

Additionally, crypto-processing has several advantages:

1. Simplified setup procedure: Unlike traditional payment systems, connecting to crypto-processing does not require complex security checks or proof of business reliability.
2. Impossible funds freezing: With a crypto account, there is no risk of funds being frozen at the request of financial organizations, which often happens with traditional bank accounts.
3. Global reach: Cryptocurrencies are not tied to specific countries or banking systems, allowing easy transactions with customers worldwide.
4. Low Fees: Cryptocurrency transactions usually incur lower fees than traditional payment methods.
5. Fast Transactions: Cryptocurrency payments are processed faster than bank transfers.

Summary
Opening a merchant account is vital to your online business development. This process may seem overwhelming, especially for newer companies, but it’s essential for ensuring the safety and reliability of the payment transactions.

Considering the complexity and specifics of opening a merchant account for high-risk entities, the best approach is to entrust the process to professionals. The IT-OFFSHORE team aims to assist in opening a merchant account and ensure the long-term stable operation of your business.