Types of Merchant Accounts (Low-Risk, High-Risk, High-Volume)
Before you can apply for an internet/MOTO merchant account, you must understand certain classifications of business type:
Low-Risk: Internet / Mail-Order / Telephone Order
This classification fits most of you reading this. It includes many of your everyday low ticket size tangible products & services (like books, electronics, dvd's, web hosting, etc.)
Discount rates range from 1.99% - 2.99% and higher. Per transaction fee is typically around 30 cents. Approval time is usually 24-72 hours (with a few companies now offering instant approvals).
High-Risk: Internet / Mail-Order / Telephone Order
This classification will fit a few of you. It includes adult, casino, eBooks, gaming, business opportunities, MLM, travel, telemarketing and other more risky ventures or products/services you market. If you find yourself whispering into your friend's ear when describing your business – chances are it's high-risk. High-Risk rates and fees WILL be higher than low-risk and require a rolling reserve of 5% - 10% at all times (meaning the bank holds on to this amount of processed sales revenue for a predetermined about of time before they release it to you). Discount rates generally range from 6% - 15% plus a transaction fee (anywhere from 30 cents to $1). Approval time is usually 1-2 weeks after a thorough review.
High-Volume: Internet / Mail-Order / Telephone Order
This classification fits mainly high-risk businesses that process over $100,000+ per month (though some low-risk businesses may be reclassified with the additional necessary volume requirements). Depending on your existing merchant relationship, you should seek out a separate high-volume solution with a bank/processor designed to handle your growing sales volume efficiently (either in the USA or Offshore). Approval time is usually 1-3 weeks and you MUST provide past processing statements for banks to believe you require this volume. The discount rate usually ranges from 5% - 15% (depending on business type) plus a transaction fee (anywhere from 30 cents to $1). The benefit is that these banks/processors permit UNLIMITED transactions (ie: they don't shut you down due to rapid growth, etc.
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