Trading companies or Forex (foreign exchange) platforms provide services for buying, selling, and trading different currencies and stocks. People make investments and then try to gain profit by selling assets when the price goes up. Just like all the other types of businesses, trading companies need to accept payments from their clients. And this is the reason why such companies need a merchant account.
In today’s Maxpay blog post, we will talk about the features of the merchant account for trading companies and how to get one. Read on!
What is a merchant account?
This is a type of bank account designed for taking card payments from customers. If you own a company of any size and want to accept transactions made with cards – you will need it. In the case of foreign exchange, the company accepts deposit payments so that a client can make an investment on the platform.
A merchant account should not be confused with a business account. The first one is only for processing customers’ payments – all the funds from this account are automatically sent to the business account. From here, one can make and receive transfers, use cards, and even manage the account with other employees.
Types of merchant accounts
Two broad categories are:
|Pooled/aggregator||ISO (Independent Sales Organization)|
|These are the accounts that combine a few merchants. The name comes from the word “pool”. Merchants are grouped based on their industry. Pooled accounts are beneficial for small companies because the total fees get smaller with the number of businesses sharing the expenses.||These accounts are for big merchants that can afford high processing fees and are the only owners and users of such an account|
Internet/online accounts can be opened, managed, and closed without visiting the physical branches of your provider. However, nowadays, almost all banks offer such services.
Merchant accounts for trading companies all belong to the high-risk category. Firstly, the majority of foreign exchanges are not regulated or licensed. This factor automatically makes such merchants high-risk ones. Secondly, this industry is risky because of the increased number of fraudsters and scammers. It’s not rare that traders request chargebacks if they fall victim to crime or even lose their investments.
Merchant account for a trading company
A trading company, also known as foreign exchange, is a platform where people buy and sell stocks and currencies (not only USD, EUR, and GBP, but less widely spread ones too). In order to do this, a person has to make an investment – in other words, to send a payment.
Banks specializing in merchant accounts for such companies develop special features and functionality that will work best for them. Further, we will discuss the crucial points to pay attention to when looking for a financial services provider for your foreign exchange:
- frequent chargeback and fraud cases
Go for a merchant account with reliable anti-fraud and chargeback protection systems – it helps identify fraudulent transactions. In such a way, you will minimize the chargeback rate.
- multiple currencies supported
If you’re an owner of an international trading platform and want to accept deposits from clients all over the world, then you would need a provider that guarantees access to different currencies. Apart from the most widely used currencies such as USD, GPB, and EUR, choose other options depending on your target customers.
- one-click payment
Foreign exchanges are the places where the shorter time of making a transaction means saving money. Usually, people use bank cards and e-wallets rather than regular bank transfers simply because such deposits are easier and faster to make. A one-click payment option is a useful function that will not only keep your clients loyal but will also attract new ones. The speed of processing payments here is vitally important as it defines the quality of the services provided as foreign exchange.
Merchant account: application process
Trading companies are online businesses that usually operate internationally. This makes an online account the best suitable solution. The application process looks the same whether you are in Europe or the USA. For your convenience and a smooth start, you can have both merchant and online business accounts with the same bank so that the interface and all the tools will be more familiar.
For a start, you will need to fill in a form online. It usually requires the personal information of the owner and the basic information about the company. Then, you would need to submit the legal documents (proof of ownership), as well as bank and chargeback statements. You will also need to pass KYC (Know Your Customer) verification to proceed with the application. Usually, the whole process does not take long, but in some cases, it can even take up to a few weeks.
Merchant account with Maxpay
Maxpay is a payment gateway service provider specializing in opening merchant accounts for both small and large companies. We bring to the table an easy online application process and smooth onboarding. Among the tools, we’re most proud of are multiple merchant IDs, compliances, chargeback protection, and fraud prevention.
What are the types of merchant accounts for trading companies?
Merchant account services for trading companies do not differ much from accounts for other industries. Therefore, the types of these accounts are the same across all spheres:
- Pooled/aggregator – low fees for small merchants
- ISO (Independent Sales Organization) – for large merchants
All trading companies automatically receive only high-risk accounts because this industry is known for large numbers of chargebacks. All these types of merchant accounts vary from provider to provider. For instance, some banks have custom-made offers and can adjust the limits on the account according to their client’s needs.
What is required for a merchant account for trading companies?
As foreign exchanges belong to high-risk industries, the list of requirements can be a bit bigger compared to businesses operating in low-risk industries. First of all, an applicant needs to provide personal information (email, phone number) and send their ID documents. Secondly, detailed information on the trading company itself is required. Among the requested documents will be proof of incorporation, business statements, and payment processing statements, as well as business email. Each application is different, so it’s no surprise that a merchant account services provider will ask you to attach some more documents.
How do I create a merchant business account for trading companies?
The first step would be to apply for a merchant account with a chosen financial services provider. Fortunately, with most banks, it can be done online, and you can fill in all the necessary information just within a few minutes. Remember that you might also be required to send some documents regarding your foreign exchange, such as bank statements or ownership documents, etc. Then, you just need to wait until your application is approved (it can take even up to 7-14 business days) or provide any additional information if requested. As soon as your merchant account is ready, you can start accepting payments from customers, and they will be able to start making investments. For some companies, it’s more convenient to have both merchant and business accounts with the same provider. However, it’s not demanded by any bank.