Why You Should Never Allow Others To Use Your Merchant Account

Read More About Business

Not all small businesses have a merchant account, and if your business does, you might be put in the uncomfortable position of being asked to use your account by a friend. You want to help them out, and don't really see the harm in it, so what should you tell them?
The short answer is: say no. You might not think it's a big deal, but the credit card companies take it very seriously. The practice of allowing an unauthorized business or person to use your merchant account is a violation known as factoring, and will result in substantial fines, as well as the possible cancellation of your merchant account. And if your account is terminated under these conditions, you may be considered permanently ineligible to open another account.
So what's wrong with factoring, and why is it considered such a serious breach of your contract? To sum it up briefly, when you are assessed for your merchant account, you are assigned a certain risk factor profile based on the type of goods you sell, the potential for fraud and chargebacks and so on. This profile helps to determine the amount you will be charged in fees. If another person or business sells goods through your account, they may have a completely different level of risk than you that your merchant account provider has no way of knowing.
I understand how hard it is to say no to a friend who wants a favour. But if someone asks to use your merchant account for their business, you must put your foot down. Explain to them the danger doing so would put you in, and tell them you are unable to help. While you're at it, explain to them the benefits of getting their own merchant account, which they are obviously reluctant to do.
Some owners of very small businesses think that they don't really generate enough sales to balance the expense of having a merchant account. But when they start allowing credit card purchases, they are certain to have increased revenue that will more than pay for the fees and cost of equipment. A merchant account for a very small business can cost less than a dollar a day in fees. A merchant account specialist can help them find lower-cost used or refurbished processing terminals, or lease them the necessary equipment.
If they suffer frombad credit history, they shouldn't make the assumption that they won't be approved for a merchant account. If their business does a small volume in monthly credit card processing, and they haven't gone through a bankruptcy or similar serious financial problem, they should have little difficulty receiving approval for an account. And if their business is seasonal and more or less inactive for part of the year, there are merchant accounts made for them too, which operate on a seasonal basis and won't charge fees during inactive periods.
So if you have a friend asking you to run transactions through your merchant account, respectfully decline, and use your powers of persuasion to help them see the benefits of getting their own account. It will be worth their while!

Article Source: http://depositarticles.com/

For more information on merchant accounts and payment processing visit: www.canadian-merchant-account-services.com/merchant_account_articles.html

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Business Articles Via RSS!

Additional Articles From - Home | Business

Our other websites
All about SEO
Beauty Tips Forum

	Print This Article
	Post Comment
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Link Us
Submission Guidelines
Ezine Notifications
Article RSS Feeds
Sitemap

New Stuff
About Us
Developer
Good shopping portal
Link to Us
Contact Us
Privacy Policy
Terms of Service