Merchant account factoring and other abuses of merchant accounts are illegal practices
and are also very risky for companies involved!
Factoring is Illegal
Merchant account factoring involves the use of a businesss merchant account by another
individual or business. Businesses who are denied merchant accounts because of previous
misuse often try to pay other businesses to process transactions for them.
Besides the legal ramifications, merchant account factoring is a huge financial risk
to the holder of the merchant account. When you allow someone to use your merchant
account, you assume liability for any chargebacks that the other business incurs.
If you are caught, your business will almost certainly face stiff fines and lose
the right to process credit cards indefinitely. Once your company is blacklisted,
it is almost impossible to be reinstated.
Avoid Other Bad Practices
There are several guidelines that govern the use of merchant accounts aside from
merchant account factoring. Not all can be listed here, but some of the major no-nos
are listed below.
You cannot:
Get a personal merchant account. Only licensed businesses may apply.
Use your business merchant account for personal use.
Charge extra for credit card purchases. You may, however, raise all your prices
to offset merchant account fees.
Establish minimum or maximum purchase amounts for credit card transactions. If you
accept credit cards at all, you must accept any purchase amount.
If you dont have a merchant account, dont risk using someone elses. Get a merchant
account from
Sage
Payment Solutions. We are one of very few processing companies that also offer merchant
account origination.
Dont get involved in merchant account factoring! Contact
us for more information on the legal use of merchant accounts and find
out which type of account is right for you.
