Merchant Processing Accounts and Holdbacks



Merchant Accounts the Latest Concern, Holdbacks

Whether you already have a merchant account to process credit card transactions, are looking to switch or compare merchant account providers, or need a merchant account for the first time, there are many pitfalls to avoid.  These include processing delays, changing fees and rates, rules on chargebacks — and the latest hot button on “holdbacks. Tight credit, rising business bankruptcies and changes in how consumers use their credit cards are contributing to an unusual amount of financial uproar involving credit cards.

For small business owners, the top credit card issue right now is holdbacks.  This is a percentage of your overall credit card receipts that the card processor or merchant bank keeps to cover possible chargebacks if a customer returns something or demands a refund for other reasons. Lately, merchant banks and card processors have started requiring new or larger holdbacks to cushion their own bottom lines should customers seek refunds after a business goes bust.

Ask about your card processor’s holdback or “rolling reserve” policies.  If your business is considered high risk (those that sell exclusively online often are), or has a less-than-stellar credit rating, you may be facing higher holdback or reserve requirements.  Other high risk categories include merchants selling only a few big buck items; those with high processing volume, and business owners with a low credit score.

Check your statements! Some merchants are missing money they didn’t even know was gone.  Find out if any cash is being held back, and if so, at what rate, and under what conditions will you get it back.  Some small businesses have successfully appealed a holdback and retrieved their funds. Others find themselves shopping for a different merchant account provider. Before you decide to switch, however, ask if you are on the hook for an early termination fee.

Take steps to reassure your account provider about your business prospects. Consider upgrading your point-of-sale (POS) systems, software and ecommerce website to a higher security level. This can decrease your exposure to credit card fraud, and offer more comfort to the merchant bank.

An excellent resource I recently discovered in this area is Merchant Council.org, a web site that offers a wealth of facts, helpful tips and information about merchant accounts, geared to small business. It’s written and organized primarily by Ben Dwyer, a small business owner himself.

Rob Olson
Quantum Merchant Services
1-888-881-0657 ext 707
7300 Hudson Blvd
Oakdale, MN 55128

Comments

Post a Comment

Popular posts from this blog

Clover POS Business Card Processing Solutions

Image
When is it time for a complete Point of Sale System like Clover? Point of sale system means different things to different people: it can be a glorified cash register, or an integrated system that joins sales, inventory, purchasing, and bookkeeping. If your business is still running on an old-fashioned cash register, odds are you could benefit from moving to a point of sale, or POS, system. A POS system is that it must work for you. It must meet your businesses needs and budget.  Most computerized POS systems today will have the following hardware A computer and screen, can be a touch screen if you are in the hospitality market Scanner Receipt Printer Cash Drawer Some newer system such as the Clover POS system come with apps that make it easy to build a system customized to your particular business. There are also other questions you can ask yourself such as: 1. Will the system grow with your business. 2. Are there different module that will need to be purc...
Read more

Card Processing Trends 2017

Image
Card Processing Trends 2017 Are we slowly moving into a cashless society? Some of the current and future trends may be pointing to yes.  Debit and credit card usage is up as well as the use of cryptocurrencies such as bit coin. At the time of this writing there are over 3 dozen (36) new cryptocurrencies currently trying to carve out an e payment niche.   Several different forms of electronic payments are slowly making it into the mainstream. Mobile Wallet usage such as Google Wallet, Samsung Pay, Apple Pay are also taking a slight chunk out of the pay with cash market. Why these different payment options are becoming popular is both simple and difficult to answer. On the easy side convenience and security.  Mobile wallets are primarily based on a device you more than likely always have with you, your phone. When utilizing your phone for mobile wallet payments you enjoy more encryption that is designed to keep your data safe. With sta...
Read more

Credit Card Processing Companies and Security.

Image
Are you considering changing card processing companies or adding credit card payments to your business?   In today's business environments most payments for goods and services are performed thru credit and debit card transactions.     To guarantee that these card transactions take place efficiently businesses seek out companies called payment processors or credit card processing companies. The job of a card processing company is to keep track of all payments made to a business thru debit and credit cards. When you are seeking out a company to replace your existing company or starting out for the first time with a new business there are a few points you must take under consideration. There are many ways to accept credit and debit cards but there are ways to guarantee you get a good company that will offer low fees and competent service. With all we know about identity theft and security breaches the one thing you want to know is how are yo...
Read more