High-Risk Payment Processing And The Offshore Merchant Accounts
There is a new trend in the Offshore Merchant Account industry—banks operating in offshore zones to protect their customers’ risks, especially when accepting payment via credit cards.
To provide a viable and secure solution for these customers, many banks have partnered with database companies to validate merchants based on transactions, the volume of business, and merchant risk level.
To be accepted by these banks, merchants need to go through a stringent level of due diligence.
Measures to Protect against Fraudulent Customers
The Offshore Merchant Account (OMA) industry has changed after adopting high-security standards for payment processing and Merchant Account applications. The application process now includes online fraud checks with search engines, such as Google, Yahoo!, and Bing, to identify any customer complaints. This ensures that customers are legitimate, have not committed fraud, and abide by the relevant rules for high-risk payment processing.
Process of Merchant Account Applications
The process of Merchant Account applications requires an in-depth verification of customer’s business and transactions. It includes a call screen with the merchant’s telephone number, during which card processors attempt to validate a recording against their list of fraud patterns.
The customer’s business address is verified by checking the validity of their domain name, phone number, and email address using search engines like Google and Bing. These searches are conducted to ensure that account holders run legitimate businesses within the jurisdiction stated on the application form. In addition, banks will obtain information about any complaints against the merchant from these search engines.
This process is done to establish the business legitimacy of the merchant and reduce high-risk credit card fraud. As a result, it gives an assurance that merchants have been properly examined for fraud by banks and internet search engines that proves invaluable. After the verification process, credit cards are processed with reduced risk to customers’ funds, and businesses are protected from being associated with rogue or fraudulent businesses.
In the process of Merchant Account applications, banks and law enforcement agencies can detect various types of fraud and hacking techniques used to commit credit card fraud. These range from basic email harvesting scams that seek bank customer’s financial information to phishing attacks where customers are fooled into providing their credentials with a false online bank site.
After the Merchant Account application has been submitted, it usually takes two weeks or a little more to receive an approval notice from the bank unless there are any errors in form submission. The main reason for this kind of delay is additional screening processes such as verification of web domain names by web registrars, review of domain ownership details, and search engine verification.
How Secure is the Merchant Account Application?
This process ensures that a merchant has not applied for several Merchant Accounts using different names and web addresses to evade fraud checks. It also helps detect stolen credit card numbers that hackers may use to apply for various accounts simultaneously with different names, addresses, and/or telephone numbers.
The new standard of due diligence processing the Merchant Account applications has changed how offshore banks do business with their customers, especially the transactional risks posed by businesses that process payments using credit cards. This ensures that rogue merchants who commit fraud are kept out of the market, and legit businesses can continue to trade without the fear of being associated with the fraud.
After all the verification steps have been done, banks can identify businesses likely to process safe and secure payments for both customers and merchants. The risk-based approach in Merchant Account applications has enabled card-issuing institutions and merchants’ low-cost payment processing services with increased security.
The use of credit cards has risen over the years, together with the demand for safer and secure payment processing. As a result, these new approaches in Merchant Account applications aim to ensure that merchants meet high standards set by card-issuing banks and customers when dealing with online payments.
Benefits of Merchant Accounts
Since the introduction of Merchant Account applications in 2009, there has been a rise in interest in how it is done and an increase in risk posed by rogue and fraud businesses. Online banking requires businesses to provide their details like the company name, telephone number, email address, and a physical mailing address. This increases the need for online financial institutions to ensure that business owners follow all rules and regulations when applying for the service.
Considering the reduced costs of processing payments using Merchant Account applications coupled with increasing numbers of customers who use their credit cards for online transactions, it is easy to see why this service is highly sought after by business owners. Banks can ensure that their business clients can pay for their services by charging them a monthly fee. The fee charged depends on the type of Merchant Account applied for and ranges from $200 to $500 per month. This kind of charge is usually imposed by offshore banks that process a high volume of payments using credit cards. Interestingly, the fee is usually deducted from the merchant account balance and not added on top.
Due to increased online fraud costs, offshore banks are even more careful before allowing business owners to apply for Merchant Account applications using their credentials. Aside from their basic information like name, address, and telephone number, they must also submit copies of their credit cards’ front and backside for verification. This ensures that their credentials are authentic and that they have not been stolen by hackers who are accessing them fraudulently.
It is also important for offshore banks to verify the business owners’ web domains and compare them to any details provided in their application form. The purpose of this screening process is to eliminate the likelihood of business owners applying for Merchant Account applications using multiple credit cards to which they are not entitled.
Further verification is done by checking the businesses’ processing history, including transactions made in their Merchant Account and payments received from both customers and card-issuing banks. This is essential because it allows offshore banks to decide whether or not a Merchant’s Account is reliable based on the volume of payments processed within a certain period and the number of disputes lodged by customers.
Safety is always an important factor in payment transactions. This is why offshore banks make sure that their Merchant Account applications are used for legitimate purposes only. The service should not be used in processing any form of illegal transactions and should be limited only to a specific product or service.
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