Two merchant accounts can save your vape business money and protect you from bank audits.
September 12, 2014
It sounds crazy, but you may be wasting hundreds of dollars each month with your credit card processor. WTF?
Here’s how it can happen: When you started your vape retail business you were issued a merchant account to handle “card present” (also known as “face to face”) transactions. Banks rate these transactions as “low risk” because they assume you are verifying the card and the ID of the buyer (you are doing that, right?). And because these transactions are low risk, you’re rewarded with a low discount rate, meaning you keep a little extra margin on the purchase.
Then you decide to expand online, or start taking orders over the phone. So you do what is obvious: use your current merchant account for your online store, or manually enter card data into your terminal for phone orders.
But guess what? Unfortunately for you, you’re now getting hit with higher discount rates with these “card not present” transactions. How much more? Try at least 1% more. If you’re transacting $10K-20K per month, that’s easily another $100 to $200 per month out of your pocket. Yikes!
Worse, if your “card not present” transactions begin to exceed 20% of your total revenue, you’re at risk of being audited by the credit card processor. And you don’t ever want to be audited by a processor.
So what do you do? It’s simple: get a second merchant account for the ecommerce side of your business.
You’ll improve your discount rate and potentially save hundreds per month in transaction fees. Think of all things you could spend on something a million times more awesome.
Fortunately getting a second merchant account is easy. If you’re already an established business, it will only take 1-2 business days to obtain a new merchant account. So go ahead and do it now. Because two merchant accounts are always better than one.