Cryptocurrency Merchant Services for High-Risk Merchants
The buying and selling of Bitcoin, Litecoin, Ethereum, Ripple, and other crypto coins can be compared to money transactions. In order to establish a solid cryptocurrency merchant services account to buy and sell crypto, merchants turn to an experienced high-risk processor.
Cryptocurrency coins, in simple terms, are computer files kept in digital wallets. People can send these computer files or digital coins to one another.
Every cryptocurrency transaction is recorded in a public ledger known as a blockchain. This is the reason why cryptocurrencies cannot be copied or reversed.
Additionally, cryptocurrency transactions are mostly anonymous, but if you purchase virtual currencies from cryptocurrency exchanges, your identity is required.
This directive is in line with the rules and regulations of countries like America and Japan that have allowed the industry to thrive.
Presently, there are more than 1600 virtual currencies in the world. However, only about 20 of these coins are popular and widely used by people.
Cryptocurrency Merchant Services Offer Opportunities
Cryptocurrencies are not only popular, they are also profitable because people can buy them and sell them later for big profits.
And using a reliable cryptocurrency merchant service provider gives merchants a convenient way to do so.
Providing cryptocurrency merchant services that allow people to buy bitcoins and other virtual currencies with their cards is a smart way to attract more customers and boost revenue.
Cryptocurrency Merchant Services & Acquiring Banks
Cryptocurrencies are deemed high risk by financial institutions because of the industry’s unpredictability.
The industry is also relatively new and this contributes to the notion that acquiring banks do not understand how best to observe and appraise risks associated with digital currencies.
Unfortunately, rather than embrace the opportunities the cryptocurrency industry brings, most banks are reluctant to provide cryptocurrency merchant account solutions.
The good news is that there are cryptocurrency merchant service companies that provide secure payment solutions for high-risk merchant accounts. These companies specialize in providing payment processing solutions for bitcoin merchant accounts or any other digital currency merchant account you may want.
The key to their success is their longevity in the credit card processing industry. They continuously study the latest trends to help their customers accept alternate forms of payment while increasing sales. And with this knowledge, they have developed a blueprint of how best to manage the risks involved with accepting bitcoin and cryptocurrencies in general.
These crypto service merchant companies take this information to the select few acquiring banks keen to open digital currency merchant accounts.
Applying for a Crypto Merchant Account
A successful high-risk merchant services application for a crypto merchant account begins with a good credit score.
If your finances are not in healthy condition, get a co-signer with a good credit score to sign those dotted lines.
If you do not have a secure website, doing business with a cryptocurrency merchant services provider will be extremely difficult.
Ensure your website is well protected from hackers and that the pages display properly as well as load quickly. Relevant policies bordering on privacy and making refunds should be boldly visible.
Sometimes, underwriters “cold call” or send emails to gage the quality of your customer support. So make your phone number and contact email address easily accessible.
If calls have to go to voicemail, you should leave a message identifying your company and the time you wish to return the call.
With regards to autoresponders, your automated message should confirm that the message has been received and tell the sender when to expect feedback.
A solid merchant website selling cryptocurrency always requires a username and password to log into an account. During your application process, make sure to include all test login details. Underwriters can use this information to access your website and see what your customers also view. This is a must for the underwriting process, especially when applying to accept cryptocurrencies and bitcoin payments.
Underwriting teams will also review previous processing statements to appraise dollar volume and processing history and eventually reach a conclusion on your chargeback ratios.
If your chargeback ratio is well above 1%, you will need a very high-risk merchant account. Please make sure to include a brief reason why this is so and more importantly tell them what you are doing to bring it under control.
Companies that offer cryptocurrency merchant services also want to know how much money merchants have in the bank to conveniently run a digital currency exchange.
So be ready to provide all bank and financial statements to support this claim. Once your application has scaled through, you will be assigned a merchant identification number (MID).
Your login information for the crypto payment gateway will also be sent to you shortly after. And with this, you can begin to process credit & debit card payments for crypto coins almost immediately.
Managing Your Risks as a Crypto Merchant
According to U.S. blockchain researcher Chainalysis, over $1.3 billion in dirty digital funds were laundered by 270 crypto addresses in 2020.
This is one of the many reasons why many institutions remain reluctant about providing cryptocurrency merchant services.
When submitting your application, the file should show that you fully understand the anti-money laundering and compliance guidelines. Take all the necessary steps you can to shore up the risks that come with your business.
Know Your Customer
Knowing your customers is crucial to the longevity of your cryptocurrency business.
If you end up doing business with a money launderer, terrorist or criminal, you could face hefty fines, sanctions, and severe damage to your reputation.
Know-Your-Customer or KYC is the process of protecting your business from unlawful activity and losses associated with illicit funds and transactions.
The standard steps needed to know your customer are:
- Confirming your customer’s identity
- Understanding the nature of customer activity and confirming that the source of funds is legal
- Assessing the money laundering risks associated with the customer because it determines how much you need to follow up.
It is compulsory to know the identity and location of your customers and have a strong grasp of what they do.
Request documentation that verifies this information is securely stored digitally to avoid any loss.
Enhanced Due Diligence
Sometimes crypto merchants need to be prepared to go beyond basic customer due diligence.
This should be an ongoing process because model customers have been known to get themselves involved in criminal activity later down the road.
Enhanced due diligence is additional information collected that provides a deeper understanding of a customer’s activities to allay associated risks.
These measures include the following:
- Type of transactions
- Means of payment
- A pattern of activity and frequency
Conclusion
Keep all of your customer records updated in case of a regulatory audit and do not check on your customers only once.
Continuous risk management and post underwriting needs to be done on an ongoing basis. The monitoring process should cover the account and financial transaction limits of the customer.
If you suspect any foul play, it is your duty to file a Suspicious Activity Report (SAR).
SecureGlobalPay is here to assist you with all your payment processing needs, including cryptocurrency merchant services. We provide competitive rates with the absolute best service in the payment processing industry. SecureGlobalPay = Payment solutions that make sense.
