My Merchant Account Blog

Multiple Merchant Accounts

Friday, April 07, 2006

I have three websites selling different items. I spoke with a merchant account agent and he told me I needed three separate merchant accounts. Why is this?

Now, on the agent's side: the more merchant accounts he sells, the more money he is going to bring in.  So of course, he wants you to have as many merchant accounts as possible.

You might not need three of them, it depends on what you are selling on all three websites. For example, if you are selling office supplies one and pet supplies on the other, chances are your DBA (Doing Business As) might not understood when the customer gets their credit card statement at the end of the month.  For example, you have applied for a merchant account for your online pet store - Wagg N Purr.  Your business is doing well and you decide you want to open another e-commerce store selling office supplies SortPlus).  You don't think nothing of it, so you add your electronic payment gateway (i.e. Trinity Collection Merchant Solutions, retail pax s300 merchant account setup) to the checkout process.  However, your customers are purchasing office products and they might not recognize Wagg N Purr.  This could cause you a lot of time explaining to the customer that the Merchant Identifier (MID) - Wagg N Purr - on their statement is for the office supplies they just ordered.  It might be too late also - they might have called their bank to request a chargeback (Non Receipt of Information Chargebacks - Chargeback Reason Code 75).

An Internet Merchant Account is not that expensive.  You will probably pay around $10.00 a month for the merchant account itself.  The electronic payment gateway (i.e. Quantum Gateway, Authorize.net) could be free to more than $100.00 a month.  The Quantum Gateway does not charge a monthly fee, no set-up fee, and no transaction fees.  The Discount Rate for an Internet Merchant Account is usually around 2.14%.  This rate could be lower if your volume is higher.  The merchant account provider will probably charge around 30¢ per transaction.  For this, we recommend Mile High Merchant Accounts - even if you do not process anything that month, you will be charged $8.00.  Most other companies will charge you a monthly fee, a monthly gateway fee, and maybe even a monthly minimum - this could cost you anywhere from $50.00 and up. 

Merchant account providers have different lists of products they consider high risk. This varies per provider greatly. So if you were selling two products and one was high risk you would want a separate merchant account for this. This way, if something happens and you experience a lot of chargebacks and the account is terminated, you other merchant account should be fine.

Another reason for two merchant accounts is to help your accounting department.  This way, money from Wagg N Purr will go into that checking account and money from SortPlus will go into that checking account.  This can easily allow the accounting department to pay bills appropriately.

Having two merchant accounts will help them know what money is what. If you are processing over $1,000 a month for each, there is really no reason not to have more merchant accounts.  Your money will get into your checking account faster than an Internet Payment Service Provider and as your business grows, it is a lot easier with a merchant account as your businesss grows.

This goes back again to what we have said about salespeople.  They might tell you it is OK to have one merchant account, but if you tell your merchant account provider (on your signed contract) that you are selling pet supplies but also start selling office products, the merchant account provider can suspend or terminate your merchant account.  They could even put you on the TMF or MATCH List. 

Here is another example, when you sign a merchant account agreement, the provider will ask you how much you expect to process each month, what do you think will be your average transaction, and what would be your highest transaction?  This merchant had been processing with the same provider for over a year.  He called the agent and asked if he could sell furniture.  The agent said that would not be an issue.  About a week later, instead of an expect high transaction of $500.00, the merchant ran a transaction of $3,000.00.  The batch was suspended until the merchant account provider could verify the transactions.  When the merchant account provider found out the merchant was doing another business, instead of opening a new merchant account, that provider terminated his account, and refunded that batch.  Unfortunately, the merchant had already shipped the goods.

If you happen to be on the TMF or MATCH List, this does not mean you cannot get another merchant account.  You might be required to pay a deposit, maybe a higher discount rate, or instead of getting your money within a couple of days, the provider might only pay out once or twice a week.  If you are honest with your merchant account provider, they might open a new merchant account for you.  Fortunately, Mile High Merchant Accounts was able to help this merchant account.  Of course, this is on a case by case basis.

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