Opening a merchant account for student loan document prep businesses

Billions of dollars of revenue are generated from the student loan documentation prep businesses. That is how significant these businesses are. But the ironical fact is that starting one such business might seem difficult especially with a lot of major banks and credit card providers denying to open a merchant account for it. Times have changed for good and opening a merchant account for such high-risk businesses is much simpler than opening a conventional account.

Online merchants

Whether you own a student loan document prep website or whether you have a physical store remember that it is very important to accept various modes of payments including Visa/Mastercard/Discover/Amex and others. And with online transactions comes the situations where the card is not present. With the increase in cyber threats, the significance of setting up a secure virtual terminal for payments is also well-known. All this should be taken care of by the student loan document prep business while also being able to effectively handle transactions involving a huge sum. This obviously shows the need for a trusted merchant account. So, irrespective of the transaction volume the process could be completed quickly and conveniently. That is where the high-risk merchant account provider comes into the picture. Online merchants have the risk of internet frauds and others to be averted. These might later result in large chargebacks which can only be handled by high-risk merchant providers.

Do not worry if your banks denied your requests

Have you applied for a merchant account from your bank and been denied? Has your application been under process for a very long time? Has your account provider locked out and blocked your account because of a sudden case of large chargeback? No matter what the disastrous situation is it doesn’t have to stay that way if you choose a high-risk merchant account. You would be saving your time, money and your business as well, from all the troubles of tedious documentation and huge fees, rates to be paid to maintain a flexible merchant account.

Why is a student loan documentation prep business shutoff by banks and other credit card processors?

This is the kind of business that one would not think to be a high-risk type. But according to the banks and other credit card providers, these have a history that defines them to be high risk.

• This is a service-based business where the customer might ask for a sudden recall of his funds if he is not satisfied at any point. Unless selling a product where only a defect or damage in the product could require refunds, guessing the situation would be a lot tougher with service-based industries like the student loan document prep businesses. Such sudden refunds of large amounts would result in large chargebacks which would have to be handled by the merchant provider. Banks would not be willing to take this burden.

• MoTo transactions are common in this business which again falls into the category of high risk. When there is a physical store or Retail / Card Present / Signature authenticated payment the risks are relatively less. But with e-commerce situations where MoTo transactions are predominant the cases of recall of funds would be more probable. There could be transactions that have been made with stolen cards. There could be technical glitches causing an erroneous transaction. There could also be cases where hackers have used the customer’s credit card information for some transactions. All these put the student loan documentation prep business in the high-risk category.

What should a startup do?

When there are inherent risks in general in this business if it is a startup the options for opening a merchant account dwindle further. Startups, in general, are considered to be risky to predict about given their lack of credit history. So choosing a high-risk merchant who specializes in handling a Startup/Business with bad credit would be a reliable option. These might involve less documentation and quicker processing times. So you would be able to quickly have your merchant account running and focus on the other more significant tasks in your business. Unlike the banks where Rates Vary by Startup vs History of the business the terms and conditions remain more or less the same in the case of high-risk merchant accounts. Choosing a startup or merchant account would thus be a robust and future-ready option. No matter what the size of the business is there would be an easy to manage merchant account to handle any transaction. This way the business would be able to cater to a variety of customers and never lose a single one of them due to the non-availability of few payment methods. And credit card payments cannot be ignored because these are the most popular choices when it comes to large volume transactions where payments happen before the customer avails the service.

Offshore and domestic options should both be considered

If you think that your business operates locally and so you might not really need an offshore account think again! The fact that offshore accounts make international transactions simpler cannot be denied. But that is not the only benefit that an offshore merchant account would offer. Many people choose offshore accounts in spite of the fact that they are not present in the region where the business operates. This might be because the local legislation imposes strict rules regarding the merchant account for that business making the payment processing a costly affair. Business, in this case, might choose an offshore account in a place where the legislation is more flexible. This is a simple example of the many benefits of having an offshore merchant account. It is true that these are slightly more expensive than the domestic accounts but to some businesses, the price might totally be worth it. So before you opt for a high-risk merchant account ensure that you analyze both the options and then pick the type of account that is best suited for your business.