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Multi-Level Marketing or MLM Merchant Account Solution

Multi Level Marketing or MLM, is a business system wherein products and services are sold through a network of distributors. Also known as Referral Marketing, Network Marketing or Direct Selling, it is a non-traditional way of doing business which always has room for more people joining in. Amway, Tupperware, Avon are some of the most popular and established MLM business giants.

MLM is a huge business today. The industry that came into existence in the 1950s has been one of the most active industries in the world in terms of member subscriptions for decades now. Be it jewelry, cookware or home products, the MLM industry operates in all types of sectors. Unless you are living under a rock, you’d have encountered an MLM representative at least once.

According to WFDSA, the industry’s sales volume was $189.6 billion in 2017, an increase of 1.6% compared to the previous year. In 2017, 18.6 million people were involved in direct selling in the United States, making it the world’s largest direct selling market.

With amazing stats and numbers to show, the industry is still tagged as High Risk when it comes to financial and banking institutions.

Why is MLM credit card processing risky?

Banks and payment processors are leery of providing merchant account services for MLM business mainly due to legal liabilities, high chargebacks and unpredictable business growth.

– Unlike a lot of merchants that are categorized as risky due to the products/services sold, MLM credit card processing is considered high risk regardless of what they sell.

– The MLM business model is closely related to pyramid marketing which is prohibited, thus creating a legal risk and keeping away payment processors.

– MLM companies have hundreds and thousands of distributors worldwide selling excellent products. Yet, the industry is also plagued by scammers that have turned out to be pyramid schemes preying on unsuspecting distributors and buyers creating an overall negative impression.

– Unexpected and unpredictable growth patterns of MLM businesses are a major factor that processors take into consideration.

– There are instances of small or start-up companies that sell cheap or fake products and services to make quick money. This leads to customer dissatisfaction and ultimately the business is shut.

– The industry also has a reputation of being unlawful with many businesses operating illegally.

– The legal issues associated with MLM lead to excessive chargebacks. Customers demanding refunds or companies getting shut unexpectedly are not unheard of in this industry.

How to obtain MLM Merchant Account Solutions?

While the risky nature of MLM business model has made traditional banks and credit card processors skeptical, merchants may also find certain banks willing to take on their business. But, this MLM Merchant account will come with high expenses and unnecessary application processing fees.

In fact, several processors offer their services to these businesses without proper industry knowledge. And when the business starts to gain sudden high monthly sales volume and growth, the account gets flagged and shut off by these merchant account providers.

A merchant account provider who knows the business nature, risks and trends of an MLM business will be able to provide efficient MLM merchant account solutions to businesses.

In order to increase your chances to get approved for a MLM merchant account,

Ensure that your business follows legal compliance terms and regulations

Ensure a long and positive processing history along with low chargeback ratio

Steps should be taken to prevent fraud and high chargebacks

If you are looking for a MLM merchant account, search for a genuine merchant account provider who will not only offer comprehensive merchant account services but also help a merchant expand and grow their business.

Aggregate Merchant Account v/s Dedicated Merchant Account: Which is best-suited for your business?

With the world going digital, many merchants are looking for a way to accept payments online. Finding the right merchant account provider along with the correct integration for their businesses is a job half done.

The online world can be a bit confusing for merchants taking a step into the digital payment ecosystem. But in order to take an informed decision on the kind of payment solution best suited for your business, it is important to understand the basic types and terms in the payment world.

When approaching a merchant account provider, a merchant is presented with different options based on the various parameters of their business. One of the most important decisions to be made is, whether to set-up a dedicated merchant account or choose an aggregate merchant account.

Now, a lot of merchants don’t necessarily know the difference between the two and may get confused. It is a common question asked while trying to decide between the two. And understanding this difference will help merchants make the right business choice.

Dedicated Merchant Account v/s Aggregate Merchant Account

Dedicated Merchant Account

This is a separate account set up exclusively for a single merchant. With a dedicated merchant account, a merchant can determine custom processing rates depending on their business. The rates are specifically based on monthly volume of sales and the products you sell- Less sales, low cost. High sales, high cost.

The merchant is in-charge of the rates and most importantly, in control of your cash.

Aggregate Merchant Account

As the name suggests, an aggregate merchant account combines and is used by several different merchants and companies. Here your funds are pooled with other merchants into a single merchant account.

While obtaining an aggregate merchant account is quick and easy, a huge drawback being you have less control on how long the money takes to complete the transaction process.

Stripe, PayPal, Square are an example of Aggregate Merchant Account.

Which is best-suited for your business?

Do I need an Aggregate Merchant Account?

An aggregate merchant account is usually preferred by businesses that are new and have low volume sales. For most online businesses, obtaining a dedicated merchant account is not entirely necessary.

In fact, it is difficult for new businesses with poor or little to no credit history to get approved for a dedicated merchant account. The approval process for a dedicated merchant account is lengthy, often confusing and complicated. There is always a risk that your business will not be approved. In contrast, you can set up an aggregate merchant account quickly, sometimes within a day, with fewer hassles.

Should I get a Dedicated Merchant Account?

While it is harder to get approved for a dedicated merchant account, it also offers far more benefits than an aggregate merchant account.

Merchants with high sales volume usually require a dedicated merchant account. Apart from negotiating custom processing rates, a merchant is in full control of their account unlike an aggregate account which is shared among several businesses.

The transaction or settlement process with an aggregated merchant account takes time. The processing time may take up to 2 days or sometimes even a week, whereas with a dedicated merchant account, funds are settled quickly and within a day.

While setting up an aggregate merchant account is quick, it is also slightly risky because the same account is used by many merchants. If a single merchant from the pool turns out to be fraud, other merchants have to suffer too.

With a dedicated merchant, the responsibility lies solely with a single merchant whom the account belongs to.

In conclusion, a dedicated merchant account is always the better choice as it involves more options and freedom to manage your own merchant account.

But merchants who are just getting started and do not wish to bother with complex payment mechanisms, an aggregate merchant account is the right choice for you. For such businesses, it is advised to start with an aggregate merchant account and switch to a dedicated merchant account once your business grows.

At the end, the choice is yours. Choose wisely!

Merchant Account Solutions: Head Shops & Smoke Shops

Head Shops have carved out a niche of customers interested in buying smoking accessories.

The popularity of marijuana coincided with the popularity of pipes and heads used as a preferred method of smoking; steadily blossoming into an industry of its own in the late 70s.

Make no mistake; these outlets sell tobacco paraphernalia used for consumption of tobacco and legal cannabis only and not the drug itself.

If you are a merchant operating in this industry, you must know the difficult legal loops you need to jump through to get approved for licensing. For some owners the trouble does not end there, their next worry being able to find a suitable bank or merchant account provider.

This is the type of business which everyone knows exists but does not talk about. It is heavily scrutinized by the government, financial institutions as well as the public.

While it is comparatively easy for retail outlets to find willing processors, it is an uphill task for card not present merchants operating online business to set up a merchant account.

The lack of banks and payment processors unwilling to accept these businesses prevents retail shops from expanding their business into the online market. It also discourages new entrepreneurs to explore the industry and open up their shops leaving space for limited growth only.

Why are head shop merchant accounts considered high risk?

The nature and type of business itself makes it a risky industry. Its association with the drug paraphernalia industry does not bode well with regulators.
Head shops primarily sell items closely related to the cannabis and smoking industry like hookahs, glass pipes, bongs as well as clothing and music vinyls. While the products are not prohibited but there are increasing regulations being places on how the items are sold and marketed.
The industry falls in a grey area. These products are not illegal but the substances used or associated with the products are sometimes, putting the industry in a tight spot.
There is a high probability the accessories being sold are used to smoke illegal substances, creating challenges for businesses looking for merchant services.
The increasing regulations and tight restrictions imposed by lawmakers put an uncertainty over the industry.
Banks and processors fear that businesses might sell illegal drug products and result in significant fines for both
For processors, the risk outweighs any benefits that are the business brings to the table.

Is it possible to get head shop merchant account solutions?

Absolutely! There are merchant account providers that specialize in this industry and have positioned themselves strongly to provide seamless services to these businesses.

Whether you operate an e-commerce shop or run a storefront business, merchant account and online credit card processing solutions customized to meet the requirements of the tobacco paraphernalia industry.

But obviously, if you happen to approach a regular bank chances are they will shoo you away at first glance or demand heavy account set-up and transaction fees. Many established merchants have trouble with their existing merchant account provider when they look to expand into the online head shop industry.

Therefore, a customized head shop merchant account solution offered by experienced merchant account providers is the right choice for your business. As these processors regularly work and have long-term relationship with high-risk acquiring banks, they assist merchants to ensure smooth and uninterrupted credit card processing transactions.