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June 27, 2013

Managing Your High Risk Merchant Accounts

Merchant AccountsThere is nothing better than opening a high risk merchant account for businesses operating in high risk environments. It solves the purpose for such risk prone institutions and their dealers for a long term. However, the real ordeal begins after opening one such account. High risk merchant accounts are nothing less than “cash cows” for such businesses but proper management is necessary in order to avail benefits in the long run.

It doesn’t need a lot of effort to manage high risk merchant account but having a prudent strategy is a must.

Here are some tips that might help in maintenance of high risk merchant accounts.

  • Easy access: High risk merchant services should try to make it really easy for the customers to get in touch. The easier it is for customers to contact the merchants the better for the business as it would increase satisfaction quotient among them. Generally, most merchants lose out on this point and maintain distance from the customers for numerous reasons.
  • Communicate: The more often a business communicates with its customers, the better. It is always advised to keep them updated about the orders placed by them. In addition, any issue related to customer or his payments should be taken as a top priority. It increases the level of communique with customers and increases their satisfaction level too.
  • Short response time: It is always better to solve customer query yourself than allowing banks to mediate as it would only worsen the situation. The moment banks enter the confrontation, the scenario becomes all the more complicated. Therefore, it is always recommended to deal with customers’ concerns in the beginning instead of dragging the whole issue further.
  • Monitor the accounts: It is very important and should be followed religiously. Businesses should always review and keep track of suspicious orders and online credit card processing.
  • Fraud protection: High risk merchants should always employ automated fraud detection systems. They can also use velocity controls on the gateway to filter out potential frauds that have been recognized by experts till now.

Most importantly, high risk merchant banks should guard against excessive charge backs. High levels of charge backs are the primary reason for termination of majority of the high risk merchant accounts. A merchant should not entertain a transaction till authentication is not accepted fully.

The most important feature that ensures high level of security in risk free merchant accounts is settlement of transactions in the form of a lot on a daily basis. This will ensure stable and fraud free mechanism. .

At times, most merchants go out of the way to please their customers and clear high ticket items without adequate proof. This practice is unhealthy as proper verification complete with signatures and other essential details can significantly eliminate the possibility of default. .

Last but not least, all the high risk merchant accounts should make it their duty to comply with merchant agreements provided in writing. .

In case of any changes in the account make it a point to contact the payment processor in advance and maintain hassle free mechanism for years to come.

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March 6, 2013

Getting your head around credit card interest rates

Credit card interest rateA credit card is a form of loan, albeit one involving more flexible terms and smaller sums of money than a personal loan or a mortgage. However, like other types of loans, credit cards also have interest rates. You need to understand more about how interest rates work, and how they will affect you and your finances, before taking out a credit card.

Why interest rates can be confusing

At the moment, credit card issuers can choose one of 14 different methods for charging interest. These methods involve calculating interest in different ways. So, if you have two credit cards which seem to have the same interest rates and you use them in exactly the same way, one could cost you more because the provider has decided to use a different method to work out that interest.


Another reason why interest rates are confusing is because the industry uses acronyms such as APR to talk about interest. APR (Annual Percentage Rate) is a standard way to work out the cost of credit, taking into account the interest rate and any other charges. This rate shows you how much it will cost to borrow money over the course of a year.

It should be the case that credit cards with lower APRs give you the best deal, but it doesn’t always work out that way. This is because many cards start and stop charging interest on transactions at different times. However, most lenders offer a ‘typical APR’ when advertising credit cards. This is because when you apply for a credit card, you may be offered a rate based on your credit history and personal circumstances. According to a Guardian factsheet, banks only have to offer their advertised APR or a better rate to 66% of potential customers.

When interest rates will affect you

If you pay your balance off in full every month, you probably won’t need to worry about interest rates. However, interest rates will affect you if:

You only make minimum payments off your total balance every month
You pay anything less than the full balance each month
You use your credit card to take money out of a cash machine

If you meet any of these criteria, you should be looking to find the lowest interest rates when carrying out a credit card comparison. If you do your research and take the time to work out how much a credit card will cost you in the long term, you are likely to end up with a good deal and a way of borrowing money that suits you.

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February 24, 2012

Historic Interest Rates Good For Mortgages Bad For Pensions

Interest rates continue to fall and have entered all-time low territory. So why is there is no jubilation and lines of people at the banks trying to buy homes or refinance existing loans?

Low Interest Rates Fail To Stimulate Housing

Despite the cheap money, it is still challenging for many homeowners who are underwater on their existing loans and who may have other credit blemishes due to job loss, job change or inconsistent income. Certainly, there are some people who are able to take advantage of the cheap money but not the massive numbers that we saw in boom years long past. Government stimulated initiatives continue to roll out which incentivize banks to refinance struggling homeowners into lower rate loans.

Retirees Suffer From Prolonged Low Interest Rates

There is a scary flip side to the interest rate environment. Pension funds which rely heavily on bonds and other interest rate based securities to generate sufficient invest returns to pay retirees are suddenly not making enough to cover their obligations. Compound that with retirees trying to living off their life savings which barely generates 1% return and you can begin to see the potential epidemic.

Perfect Storm Endangers Pension Funding

The longer we endure this type of interest rate environment, the wider the funding gap of pension plans. This will put pressure on stocks if companies are forced to close pension gaps with current earnings. When you also consider that 1) our massive Baby Boomer generation is retiring right now and 2) the longer life expectancies of Americans due to better health care, you can see how there are several layers creating a perfect storm of massive pension underfundings.

Good News, Bad News Economy

Most subjects dealing with the economy and finances have a pro and con. Just like when you buy and sell stocks, there is a winner and a loser. With economics, there are two sides to every coin. For example, low interest rates help homebuyers but hurt people living on fixed incomes. When interest rates rise, many investors will benefit, but people with adjustable rates on credit cards and other debt will have to pay more interest. Even if you do not understand all the details, as a consumer, it is wise to stay aware that good news in one sector means the potential for bad news elsewhere.

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