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Support Services: Who Needs Multiple Merchant Accounts? Probably You

1 Aug, 2012 By: Curtis Kleinman Response

Today more than ever, businesses must put themselves in a secure position by maintaining multiple merchant accounts. Unfortunately, those who most need multiple merchant accounts often have only one.

The problem is, there are circumstances beyond one’s control — such as fraud and chargebacks — that can jeopardize your ability to process payments through a single merchant account. Having one merchant account for a high-risk business is like using a rubber band as a bungee cord.

Who and Why to Maintain More Than One Account

  • Multiple Payments or Products. Those with continuity payments, trial offers, upsells, cross-sells or memberships involved must protect themselves.
  • TV or Radio Advertisers. Those who have long- or short-form DRTV or DR radio campaigns must handle the spike that a successful spot can bring.
  • Affiliate Marketing-Driven Sales. You must protect against bad affiliate traffic. A very enticing incentive can lead consumers to sign up for a trial in the hopes of winning a prize. If they don’t win, consumers often stop reordering the product and you lose. Often, bad affiliate traffic will help drive sales, but also drive refunds/chargebacks to your merchant account several months from the time of the purchase.
  • Achieve a Greater Processing Volume. By leveraging the money they keep in their business bank account, a company can acquire a second or third merchant account. Merchants want to be able to process every sale they are entitled to without any obstacles imposed by their banking institutions. Merchants who work with multiple affiliate networks can better identify the source of problematic affiliate traffic.
  • Accounting Purposes. Some businesses want to separate their orders based on factors like the method of sale, such as E-commerce vs. MOTO (mail order/telephone order), or method of advertisement, such as radio versus television. However, one thing to note when considering multiple merchant accounts: a marketer is not supposed to load balance in order to drive traffic to the account with the lowest chargebacks. This practice is frowned upon and, often, sends a red light to regulators.
  • Billing Descriptors. Multiple merchant accounts will allow you to have a more accurate billing descriptor, which is how your charge appears on your customers’ credit card statements. If a customer can easily identify your purchase as valid, this will greatly reduce customer confusion, disputes, retrievals and chargebacks. Adding your customer service phone number to your billing descriptor is another great idea.
  • Banks’ Changing Risk Tolerance. You can be asked to leave your banking institution, thereby losing the ability to process credit cards immediately. Ask nutraceutical merchants, skincare merchants, educational merchants or other marketers that have been shut down and unable to process payments. Many were terminated without any notice or proper time given to open another merchant account.

Know How, Where and When to Implement

For a merchant to implement multiple merchant accounts running simultaneously, it must have properly designed technical infrastructure to support more than one merchant account. This includes a gateway, which will enable a load-balancing function. Merchants should have some form of dedicated in-house or outsourced services at their disposal. This should include quality customer service, technical support, and experience with E-commerce.

Additionally, many merchants wait until they’re in chargeback trouble to try to acquire an additional merchant account. By that time, no banking institution will want your merchant account. Or, if they do decide to provide you a merchant account, the chances are that your reserves and processing rates will both be higher.

In case you’re wondering if the necessity for multiple merchant accounts is common, many companies that fund media for DRTV commercials absolutely require that their clients process using multiple merchant accounts. More vendors should insist on this, since their profit is attached, and they owe it to their clients to provide professional advice. 


About the Author: Curtis Kleinman

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