There’s also a lot of demand for online auction sites and platforms nowadays; people like the idea of auctions, as they represent an opportunity to get good prices and pay less than expected for certain items from the buyer’s perspective, as well as giving sellers a way to sell items in a way that is both quick and convenient.
It’s clear to see, therefore, that online auctions have a lot of different advantages to offer for all of those involved, and running an online auction business or site can be highly lucrative. Because, as the auction runner or owner, you can collect fees for every item that is listed or every successful sale that takes places on your platform.
eBay is the most obvious example of this, but there are many other successful online auction sites and businesses out there that are making lots of money. Unfortunately, setting up one of these sites isn’t always as simple as you might expect. There are various challenges and complications involved in the process, and this guide will cover the challenges of getting an auction merchant account.
Auctions have been around for many, many years. In fact, historians have found evidence to suggest that the first auctions were taking place thousands of years ago. During the days of the Roman Empire, for example, Roman soldiers would hold auctions for the spoils of war, while Roman nobles would use auctions to sell off items of furniture and pay their debts.
In more recent times, auctions were traditionally held at exclusive locations, making them relatively inaccessible for a lot of people. But then the internet came along and changed everything, with the launch of online auction sites like eBay helping to make auctions accessible for everyone, giving people the chance to sell their own items at auction to buyers from around the globe.
Online auctions are really popular nowadays, and with good reason. But, since all of the action happens online, you have to have good infrastructure in place to make your online auction system work, as well as an auction merchant account in order to facilitate the high risk payment processing involved in online auction transactions.
So what exactly is an auction merchant account and why are these accounts such a vital piece of the online auction business puzzle? Well, before looking at the intricacies and challenges involved with getting auction merchant accounts, let’s first focus on what exactly a merchant account is with a simple and clear definition.
A merchant account is a special type of business account that makes it possible for a business to receive digital payments via debit or credit card. For example, if a business wants to sell a product or service online to a customer paying via credit card, a merchant account is necessary in order to make that transaction happen.
The money from the customer goes into the merchant account first of all for processing, before passing on to the main business account. In a way, the auction merchant account serves as the “middleman” of the whole procedure, and these auction merchant accounts are really important when you’re running an online business, because basically all of your business transactions will be happening online. Without an auction merchant account, you’ll be unable to do any business at all.
Unfortunately, even though auction merchant accounts are vital for online auction platforms and business owners, getting one of these accounts can be quite difficult. Indeed, most of the usual banks and financial institutions you would turn to for help are likely to reject you. And if you already have accounts in place and then start conducting online auction business, banks or payment processors may cancel your accounts or hold your payments.
Why do they do this? Well, it’s all because online auctions are regarded as a high risk industry. There are all sorts of high risk industries out there, from alcohol and firearms to travel and property management. Online auctions fall into that same category, and banks generally don’t like doing business with high risk companies, because of the problems they may have to face along the way.
One of those problems is chargebacks. A chargeback is when a customer disputes a payment on their credit card statement or makes a request with their bank or credit card company to get their money back. This can lead to a lot of fees and hassle for the banks and financial institutions involved, and online auction sites have high risks of chargebacks due to unsatisfied or regretful buyers.
Someone might buy an item on your online auction platform and find that it doesn’t meet their expectations when it arrives, for example. So they may try and directly get their money back by contacting their bank, and this can cause a lot of complications. In addition, online auction sites can be targets for fraudsters looking to trick people into paying for low quality or fake items, causing even more drama.
It’s understandable that certain banks and payment processors don’t want to deal with the risky nature of online auction sites. But if you want to run one of these businesses, you still need an auction merchant account to make it happen. So what do you do and how do you actually get an auction merchant account of your own?
Shark Processing can help. As specialists in high risk credit card processing and high risk industry in general, we know the ins and outs of what it takes to run a high risk business. We understand the challenges that you can face with your high risk online auction business, and we’re here to help you get the merchant account you need.
With our unparalleled levels of experience in high risk merchant accounts, along with our extensive network of trusted payment partners and our commitment to providing the very best service to every customer, we aim to be you go-to source for merchant accounts for auction businesses. Give us a call to find out more about what we can do for you.