Businesses still on the fence about opening a merchant account in South Korea prove that the specialized bank account is nothing short of a necessity. Their market is perhaps the most penetrated by electronic payments. So businesses in the country might be perceived as obsolete if they continue on without a South Korean merchant account.
The buying culture in South Korea places particular emphasis on convenience and speed. So it’s really no wonder that card payments are preferred by the overwhelming majority. And if you’re a business hoping to accommodate that preference, a South Korean merchant account is a must.
Ever wondered how credit and debit card payments are processed? Well, the very foundation is the merchant account. Designed specifically for businesses, South Korean merchant accounts provide the destination for electronic payments. Established with a merchant acquiring bank, these accounts are essential for businesses hoping to accept payments from credit and debit cards.
Now, although the merchant account in South Korea serves the purpose of a destination for cred and debit card transactions, the whole process is conducted by the acquirer. Your bank stands as the liaison between your account and the brand on the buyer’s card. That is, when a transaction is initiated, the merchant acquiring bank does the job of communicating with the card issuer.
Here’s what happens:
Most banks hold the money in escrow to release the funds into your account at a designated time. Sometimes, they can disburse funds immediately after debiting the buyer’s account. Other times, they can funnel accumulated payments at the end of the day or at a designated weekly schedule.
It all depends. Some banks might call for an initial deposit to keep your account open. In terms of fees per transaction, the rates vary widely. Banks impose these added charges as the cost of their services. So for every electronic payment, the process for your business, they take a cut from what you get.
The numbers aren’t set in stone, but the typical rate stands at between 0.5% to 5.0% of the total transaction cost. Bear in mind that this fee isn’t added to your buyer’s total purchase amount. Instead, it’s baked into the payment. So the banks effectively take a cut from what you earn.
To offset the deductions, some businesses impose a fee on payments equivalent to the percentage required by the bank. This means that the buyers end up shouldering the processing fee to spare the business from the added expense.
The rates per transaction are calculated based on a number of factors. But the single most deciding factor would have to be the business’s risk rating. With merchant accounts in South Korea, the risk is essentially the chances of businesses getting refund requests or chargebacks.
Essentially, a chargeback happens when a buyer disputes the transaction for whatever reason. Maybe someone used their card information for a purchase they didn’t authorize, or maybe they didn’t like the products or services they got in exchange. Whatever the reason, banks frown on chargebacks and try to avoid them.
Banks are naturally conservative, avoiding doing business with clients that might cost them money. And because reversing a transaction also imposes penalties on the banks, they do what they can to make sure it doesn’t happen too often.
That includes imposing steep penalties on chargebacks. Some banks will calculate the penalty based on the cost of the amount to be reversed. Others impose graduated fixed fees. According to surveys, these charges can be anywhere between $20 and $100 USD per chargeback.
Another thing worth mentioning is that high-risk merchants‘ accounts in South Korea may also be closed down by their acquiring bank if they exceed a specific number of chargebacks.
Fortunately, lots of businesses have gotten creative when it comes to dealing with chargebacks. Instead of reversing the payment right away, most businesses will offer a variety of other options like replacing the item, offering store credit instead of a cash refund, or even refund the cost of the purchase through other means like bank transfers or cash.
Risk isn’t just an imaginary quality. Banks use specific standards to measure a business’s risk rating. That’s why during the application process, they’re going to ask for various documents and paperwork to get a better understanding of what your business is and where you stand.
Although banks use their own algorithms when calculating risk, some business qualities have been known to increase perceived risk. These include:
Needless to say, businesses that tick off most of the items on this list will struggle to find an acquirer that will happily and willingly take on their venture. In fact, even moderate-risk businesses might struggle to get their merchant account in South Korea approved.
On the off-chance that you are approved, there’s the problem of stifling contracts. Some banks will deliberately impose stipulations that make it tough for businesses to maximize the benefits of their merchant accounts in South Korea.
Some even withhold payment disbursals and hold on to accumulated funds to make reversals easier in case businesses are faced with refund requests. But that goes against the best interest of their client.
Unfortunately, some businesses find that there’s no option but to simply accept these suffocating terms for the sake of meeting their buyers’ preferences. What many don’t know however is that there is a choice — and that’s what Shark Processing is here to prove.
As one of the leading merchant account specialists in the business, Shark Processing provides assistance to high-risk clients in South Korea who want better, brighter futures for their businesses. Our goal is to find you the perfect match, meticulously assessing your business needs to pair you with a partner bank that keeps your growth at the core.
Our team understands how hard it can be to deal with banks that are simply looking to profit off of your wins — and your pitfalls. So we do our part to guarantee safe placement with honest, trustworthy, reputable banking partners that aim to level the playing field for hard-to-place merchants.
Going above and beyond the call is what we do best. So we also stand to champion your cause, negotiating the best terms and rates to keep deductions low on your end. We also carefully discuss contracts with potential partners to find you a solution that’s flexible, client-centered, and focused on your growth.
Whether you’re a high-risk business hoping to taste approval for the first time, or if you’re looking for greener pastures with a bank that will treat you right, Shark Processing is here for you. Our polished services put your welfare front and center, giving our clients the VIP treatment they deserve.
We’ve tailored our service to give you the utmost convenience, comfort, and safety, allowing you to sit back and relax as we do the legwork and retrieve approval for you. Get your high-risk merchant account in South Korea set up in just a day when you work with Shark Processing.
We understand how hard it can be to set up a high-risk merchant account when it seems that all banks are against your cause. And that’s why we aim to streamline the experience for you. No more long waits, unanswered emails, bad contracts, and steep penalties and fees — Shark Processing can get you the perfect partnership in just 24 hours.
Ready to move on with your application? Contact us today to find out more about what we can do to serve your business. If you’re ready, you can also send through your application by filling up our on-site form to start the process. Because here at Shark Processing, approval is just a day away.