Ach processing is a type of business account between a merchant and a bank or financial institution which facilitates the ach payment processing transactions of the merchant. This contract ensures that the bank accepts payments for the products or services on behalf of the merchant.
Especially for a merchant who is conducting an online offshore business, it is essential to have a bank which will process his ach transactions. All businesses do have a certain element of risk factor involved with it. As the saying goes, no pain no gain. cbd merchant account 2019
Banks or financial institutions do classify the types of ach merchant accounts based on the risk profile the account poses. There are mainly two types of merchant accounts. First is the normal account, where the merchant can directly access the card and ensure that it is a legitimate customer, thereby the risk involved is minimal. If the concerned party conducts a business which is not a high risk one, it is rather easy to set up a merchant account.
The second type are called the high risk accounts which involve the accounts where it is not possible to visually testify the customer. It is highly recommended for a business to consult with a company which specializes in placing these hard to place business accounts. These types of accounts include adult entertainment merchants, online tobacco merchants, replica merchants, online gambling merchants, pre-paid calling merchants, VOIP merchants, multilevel marketing merchants, online auctions and debt services, ISP and hosting services, online dating services or simply any transaction that takes place with the customer physically not present. Thereby, the possibility of fraud activity is much greater with this type of business which results in classifying these types of accounts as “high risk” ones. Naturally, these high risk ach merchant accounts present the risk of the dreaded charge backs for the banks in question. It has been proved by various researches that these high risk merchant accounts are more susceptible to fraudulent transactions.
But, it is very important on the part of the merchant to have a reputed bank to look after his online ach processing. If he goes ahead with the wrong bank, he will very soon see him selves out of the business.
All banks have strict guidelines in their underwriting department when it comes to setting up high risk ach merchant accounts. This causes the banks to simply turn down these applications. Among these high risk ach merchant accounts, adult oriented merchants find it even harder to establish a merchant account. Most banks or financial institutions turn down their applications merely due to the nature of their business content. Even though the adult oriented business is highly lucrative and is quite stable, most banks take into account their ethical values and often refrain from setting up high risk ach merchant accounts.
Due to the limited availability of high risk ach providers, these merchants faces a scenario where the available providers charge them quite anomalous rates for their account transactions. Also, there is the possibility that the bank of financial institution keep on revising the rates which can astronomically increase in no time. But fortunately, there is betterment in these areas. Today, there are banks which do a case by case analysis and help to set up an account.