A lot of people consider penny auction websites to be nothing more than gambling sites.  And many of the major credit card processors and online payment gateways are beginning to get cold feet and are denying merchant accounts to penny auctions or other online auction sites.

Yet most of these businesses operate well within state and federal guidelines and have seals of approval from the BBB.

Here at The Transaction Group we understand how critical it is for a business to accept credit cards. This is why we’ve partnered with multiple high risk merchant account providers to offer a variety of credit card processing options for penny auction and other online auction sites.

If your business is new, our application process is simple – and accounts are approved quickly. And if you’re currently processing credit cards, we can save you a lot of money by lowering your rates. Check it out:

Why Your Business Model is Important:

Amongst the primary considerations for card processing companies when they are determining risk is your business model. This includes an analysis of the following:

• the specific services that you offer, or the products you supply
• the usual price attached to your products or services
• the ways your organization promotes & publicizes the products/services
• your customer support
• the manner in which you deliver your goods and services

If the analysis reveals that your penny auction business is more risky than normal, you will have to establish a merchant account through a processor that specializes in higher risk business models.

Other Potential Risk Variables:

The likelihood of generating chargebacks is probably the most critical issue with respect to establishing the potential risk of an online auction business. A processing company that lets a merchant handle charge cards while experiencing a higher ratio of chargebacks than is approved by Visa and MasterCard can actually incur substantial penalties. On top of that, should the merchant produce an excessive amount of charge backs and not be able to deal with the accompanying debt, the financial institution will have to do so.

Amongst the other factors impacting the determination of whether or not a business endeavor is going to be labeled as risky, are the company owner’s personal credit rating score, product sales methods, high selling prices, and whether the business is subscription-centered or offers recurring payment services. As well, companies that manufacture personalized (i.e. one-off) products might well be determined to be risky.

Your Processing History Can Affect Your Penny Auction Merchant Account:

Unquestionably, if you’ve already got a good processing profile, you will enjoy a lot more leverage in regards to negotiating processing rates and fees with your credit card merchant account company. So despite the fact that your business is viewed as risky, you can probably obtain low cost pricing.

The large majority of processing providers are sure to ask for at least 3 months of credit card processing documents before they’ll consider discussing a processing discount rate for your business. The reason behind this particular stipulation is because they need to see whether you have experienced trouble with chargebacks or other factors (e.g. a higher than normal refund history).

In case your online auction suffers from a poor card processing profile, you can still get approved by some high risk providers, but you will probably be subjected to a higher discount rate.

Consequences of Being Assessed as a High Risk Business:

As a result of the higher probability of fraudulent activity, a large number of high risk merchant credit card account contracts include special terms, such as greater funding delays, cash reserve requirements, as well as restrictions on sales volumes & high-priced products. And, of course, they will impose higher than normal discount rates and fees on the business.

In order to help their high risk merchants, several merchant account providers make available programs to aid the merchants in lessening potential fraudulent transactions and/or charge backs. You should make use of these when offered to your penny auction site. Reputable high-risk companies can be extremely helpful when it comes to minimizing your processing costs.

If a merchant account provider evaluates your risk factors and decides that they are simply too significant, it will probably refuse your application for a processing account. This might be a consequence of any of the concerns previously mentioned. As well, external issues including changes in legal requirements may cause an enterprise to get turned down for a merchant account.

How to Get Started with Online Auction Processing:

The Transaction Group understands the obstacles that decision makers face when looking at securing credit card processing for their online penny auction website. We know that every business is unique in the high-risk merchant services sector, so we have developed relationships with several reputable credit card processors who can service the online auctions niche.

To begin accepting charge cards right away at your online auction site, or for more information with regards to applying for a merchant account, you can click on the links just below.