Monday, February 8, 2010

Merchant Account Fiasco

Last Fall I helped organize a local developer conference and we used a registration service to handle our online credit card processing fees. It went really well, but the downside is that their rates are a bit high.

For my upcoming conference I wanted to try and save a bit of money on the credit card processing, and to do this I’d need to open a Merchant Account. From Wikipedia:

A merchant account is a type of bank account that allows businesses to accept payments by debit or credit cards.

I went into this process very naively. I assumed opening a merchant account would be akin to opening a bank account: you go in, you sign papers, you get an account and an account number. Voila, done and done. Unfortunately this was not my reality.

My business banks with BMO, but the banks themselves don’t handle merchant accounts. Other companies do, and BMO partnered with the Royal Bank to create a company called Moneris which they recommend to businesses looking to create merchant accounts. I was put in touch with a Moneris rep and began the process.

And what a process it was! Remember that all I needed was an account to handle online credit card payments. To do this though, I would need to complete a few steps.

Step 1 – Bring Up the Website to Moneris’ Standards
There are a whack of standards your site must meet to use a Moneris merchant account: Privacy Policy, Terms of Service, Refund Policy, visible images of the credit cards accepted, etc. These must be in place before the credit application can go forward.

I was able to provide a test-site for the registration so that they could go through and ensure everything required was set up properly, but as a final signoff they required seeing the registration link be live from the main website. This can be challenging if you don’t want your website open for registration beforehand.

I get why they did this: they want to ensure that I’m actually collecting registrations from the site I’m claiming I am, but its still annoying.

Step 2 – Take Out a Mortgage
Well, not really…but let me tell you: the credit application you fill out for opening a merchant account feels like you’re taking out a mortgage. You’re asked about your assets, liabilities, current income, previous loans, dependents, life insurance, etc. It’s a full disclosure of your entire financial standing.

Step 3 – Expect the Unexpected
At this point I’m very frustrated with the process. It just seems like more work than it has to be to open up a merchant account, and it also feels like Moneris has more involvement with my business than I want it to (While Privacy Policies and Terms of Use are good for any website to have, why is my merchant account provider dictating that to me?). I also felt very uncomfortable with the amount of financial information I had to provide.

But then came the phone call today that pretty much ended my quest for a merchant account. Someone from the credit department at Moneris called me to say that the merchant account could be opened contingent on a few things:

1) Need registration link available from the actual webpage, not just the testing link, to verify that the registration is from me (I mentioned this previously).

2) Provide a $6,500 deposit to cover 50% of the credit exposure. This would be paid back after a certain time period.

3) Something about Non-face-to-face transactions…

I didn’t really hear what she was saying at #3 because I was dumbfounded by #2: $6,500 deposit?! So basically, I had to partially cover the payments I’d process up front to ensure that if there were issues with refunds or anything that I’d actually pay them back and lower the risk on Moneris’ side.

Great for Moneris, but horrible for me. And insulting really. I understand in this day and age that there needs to be more scrutiny to ensure fraudulent and criminal activities aren’t being performed. And maybe, because Moneris is such a big player in the debit card machine business, they see website payment processing as a higher risk and therefore need more hedging.

But this is just ridiculous! How can it be so difficult to open an account to handle online payment processing?! Why are businesses made to feel like they need to jump through hoops for the privilege of using Moneris’ services?

I was trying to get a less expensive method for processing credit card payments. Instead I just wasted a lot of time, got very frustrated, and pushed back launching my site registration.

Very disappointing Moneris, very disappointing.


James said...

Just so you know, it's the same everywhere to some extent. I didnt have to sell any children but that's because I wasn't planning a one-off event like you. But the rest of the process is very similar, i.e. painful, whoever you use...

Gary Pronych said...

For a non-profit I do work for, we used PayPal business services.
The application process was not as bad as you experienced with Moneris.

They offer a REST API that made integration with .NET fairly easy; testing and debugging can be a pain.
Credit card payments are flawless, debit and interact payments are challenging because you have to wait x days for the transaction to complete.

elanoralph19 said...

If you are in any business and getting your money online with the help of payment gateway then this merchant account accepts the credit card of the customer through this gateway.

Merchant account

Blue b said...

The hard and tough decision is the selection of the perfect Merchant Account Services for the business that could have reasonable rates on transactions. But after all businesses needs to accept and take the Credit cards for time and easiness.