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Merchant Account Kenya

August 25, 2022

In Kenya, paying for products purchased online with credit or debit cards has become the norm. And because Kenyans are becoming more and more comfortable spending with cards, it’s time businesses listen to their consumers — and they are. Over 83% of businesses operating online offer card payments as an option. Are you?

With most businesses across the globe setting up a merchant account Kenya based ventures are following suit. Allowing business owners to accept and process card payments both in-store and online, a merchant account is essential for businesses of today.

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What is a Merchant Account?

Have you ever tried paying for groceries by sticking your card into a point-of-sales terminal? What about entering your card information through a secure online form to pay for your favorite streaming service? Businesses make these payment options available to their consumers by way of a merchant account in Kenya.

A Kenya merchant account is a specialized bank account intended solely for use by businesses. They’re funded not by deposits or bank transfers, but by consumers making electronic payments. These accounts are held by merchant acquiring banks that stand as the intermediary between you and the buyer’s card issuer.

With a Kenya merchant account, businesses can start taking payments from debit and credit cards. While that might not seem like such a big deal, there are loads of benefits that your business can reap by taking electronic payments:

  • Faster order fulfillment – Conducting business online? Because a lot of the payment options used for online transactions don’t provide immediate confirmation, it can take time to ship out orders even after your buyers send their payment. Transactions conducted through a merchant account provide near-instant confirmation, letting sellers fulfill orders much faster than any other online payment method.
  • Seamless shopping – Did you know that buyers will often hold on to their preferences? And if you can’t meet what they prefer, then they’ll just move on to the next brand. Since most people in Kenya actually choose to pay with a card, offering electronic payments just makes your products and services more accessible.
  • International reach – A merchant account in Kenya is more than just a new way to pay. Opening the doors for cardless transactions, a Kenya merchant account also lets you take payments from buyers from around the globe. As long as you can figure out how to send orders to offshore locations, then a merchant account in Kenya should help you go global.

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How Does a Merchant Account Work?

The merchant acquiring bank actually does most of the legwork for your account. By communicating with the card issuer, the acquirer performs all of the steps necessary to execute an electronic payment on your behalf, and here’s how it happens:

  • The buyer sends their information – Once your buyer is sure of their purchase, they can use their card to make a payment in one of two ways. If they’re buying online, they’ll have to send their card information through a virtual form. If they’re buying physically in-store, then they can send their info through by way of a point-of-sale terminal.
  • Your acquirer takes the information to a payment gateway. The payment gateway is a facility of the card issuer that works to protect the accounts of their clients. Here, they check if all the information is correct and if the buyer has enough funds to finance the purchase.
  • The card issuer gives the go signal. The payment gateway opens once all the information is deemed correct. Then the card issuer sends approval to the acquirer so they can reach into the buyer’s account to get the funds.

The money is kept in an escrow at the bank and may be released depending on the schedule. For merchants in good standing, a bank can release the funds immediately after taking them out of the buyer’s account. More commonly, however, banks will disburse accumulated payments at the end of the day or once a week on a routine schedule.

 

Fees for Using a Merchant Account in Kenya

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The merchant acquiring bank doesn’t perform these services for free. Processing payments comes at a cost, and the business will have to shoulder them. The fees are charged on a per-transaction basis, and the rates vary from business to business. As a standard though, these charges will almost always fall between 0.5% and 5.0%.

The rate depends on a number of factors, including your risk level, your relationship with the bank, and how well you can negotiate terms. It’s also worth mentioning that the amount is taken straight out of the payments that your buyers tender.

That means the bank will not charge an added 0.5% to 5.0% on the buyer’s payment, and will instead take the amount out of the final price that you bill. That’s why some sellers will impose up to a 5% added charge on payments issued by card to offset the potential deduction.

 

Kenya Merchant Account Penalties

Yes, penalties exist, and they happen when the merchant account in Kenya experiences a chargeback. In essence, a chargeback is a refund. When buyers don’t like the products or services they get, they have the option to request a refund which again, the acquirer will have to perform.

But the problem here is that chargebacks also cost the merchant acquiring bank their fair share of penalties since no one wants to have to reverse a payment. That’s why banks will charge steep fees on chargebacks, ranging between $20 and $100.

While the charges might seem bad enough, some banks go as far as including a termination clause in their contracts that states that Kenyan merchant accounts that exceed a specific number of chargebacks will be irrevocably closed.

For that reason, lots of vendors have gotten creative. Instead of offering cash refunds, some businesses offer store credit, or even offer to send over a replacement product instead.

 

What are High-Risk Merchant Accounts in Kenya?

Again, one of the factors that banks use to calculate the rates of penalties is the business’ risk. A high-risk merchant account in Kenya is essentially a business that demonstrates a higher potential for chargebacks. That means that if you’re more likely to get chargebacks, the higher the penalties you’ll have to pay.

Banks are conservative in nature and are especially careful to venture into a contract with a client that might not do them well in the long run. So they ask for loads of documents and transaction records to measure your risk.

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Here are some factors that can affect your risk rating:

  • Most payments are issued online (card-not-present)
  • Transactions average US$500 or more
  • Monthly revenue breaches US$20,000
  • International consumers
  • Payments are taken in foreign currencies

  • Operating in high-risk industries (see our list of recognized high risk markets)
  • Located outside of the US, Canada, EU, Australia, or Japan
  • Recurring payments (subscriptions)
  • High rate of chargebacks amounting to 0.9% or more of total transactions
  • Low personal or business credit rating

Businesses that meet most of these criteria are categorized as high risk and may experience significant difficulty in getting approval for their merchant account in Kenya. In fact, for most moderate to high-risk merchants, approval can be near impossible without assistance.

 

What Can We Do For You?

If you’ve tried sending applications for your Kenyan high-risk merchant account to no avail, then it might be high time to call in reinforcements. Shark Processing is a merchant account specialist that’s particularly invested in offering assistance to high-risk merchants in Kenya. We get you the approval fast, letting you set up your Kenyan merchant account in just 24 hours.

We do this by aligning ourselves with trusted international banking partners that openly and willingly accept partnerships with hard-to-place merchants. Our accommodating staff work round the clock to assess your business profile and handpick a bank that will work best for your venture.

At Shark Processing, we’re dedicated to establishing fruitful, effective, and lasting partnerships. Enjoy guaranteed placement with a bank that can support your growth when you work with Shark Processing.

 

The Shark Processing Guarantee

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There’s no need to place your business in the hands of a service that might not have your best interest at its core. At Shark Processing, we provide world-class services with the ultimate goal of building up your business.

  • ZERO application and set-up fees
  • Accommodating customer support
  • Expert merchant account specialists
  • Guaranteed placement for all applications

  • Easy processing
  • Fast results — 24 hours or less!
  • Trusted international banking partners
  • Proven results

Shark Processing wants to see you grow, and a merchant account in Kenya should help you do just that. Cut through the long waits and the anxious anticipation with our lightning-fast services that can get you approval in 24 hours or less.

Contact us today to learn more about our services, or skip through the questions and get started on your application by filling out our pre-application form on site. Here at Shark Processing, approval for your Kenyan high-risk merchant account is just a day away.

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