Forex Merchant Account

How To Get Merchant Account Services for a Forex Merchant Account

The world of financial services and trading is constantly changing, with new products being introduced regularly. The Forex market remains a highly popular and potentially profitable one. This industry can grow even more if you become a Forex broker, and you’ll need to work with a company familiar with establishing a Forex Merchant Account.

There are many challenges within this industry. One such example is accessing merchant account services, meaning being able to process financial transactions with your customers. Under a normal business, there are many ways to take payments, including via credit card payment gateways or ACH payments. Forex accounts are often high-risk ones. This can add additional cost burdens to your business and cut into your profit margin.

Fundamentally, this means that you have to find a Forex merchant account provider who has experience in working with high-risk merchants. Your vendor will be able to help identify your risk, find ways to reduce it and ultimately save you money.

What Is Necessary for My Forex Brokerage To Start?

If you are starting a Forex business in the United States, you will need to overcome some unique licensing hurdles and challenges. There are many steps that you will need to take. Some of these are standard to any business and involve creating your own LLC, registering for taxes and applying for any state and local license requirements. You will also face additional requirements if you are opening a physical office. If you aren’t, you will need to find a meeting space for client meetings.

Critical to starting any business is also accessing merchant account providers. Merchant account providers will be responsible for processing credit cards and transferring money. These industries have access to secure financial tools and can transfer money from your customer’s bank account to yours. Some businesses face unique financial challenges and there is no question that a Forex business is among those.

What Sort of Challenges Might My Forex Business Face?

In addition to the above regulatory challenges, there is no question that your Forex business may be considered a high-risk one by a merchant account processor. This can create major problems if you are attempting to process order and credit card payments from your customers for who you are executing trades.

A high-risk business has been statistically determined to be a higher risk for merchant account providers to provide certain services, including credit card processing, ACH payments and more. The nature of this risk may vary, but generally speaking, it exists because merchant account providers have found that businesses within this industry are more likely to experience fraud or chargebacks.

Chargebacks can be deadly for any business. They occur when the holder of a credit card or financial account seeks a refund on a credit card charge or bank payment. The reason for this refund may vary and it can include everything from fraud to dissatisfaction with a service to a lack of transparency about why they were charged in the first place. Businesses do have many ways to reduce chargebacks, but for some industries, chargebacks are simply a fact of business life.

Chargebacks are so problematic because they result in a loss of revenue and additional processing time for both the business in question and the merchant account provider. As such, your business must do everything it can to reduce or eliminate these chargebacks. 

Why Is a Forex Business Considered High-Risk?

High-risk merchants are often international ones or ones that do business in many foreign currencies. This is because these businesses are often more likely to be subjected to fraud and when fraud is discovered, a vendor has to return the money. The nature of Forex is foreign-based and does business in foreign currency. In many cases, businesses simply can’t implement stringent international security checks and protocols the way they can enforce domestic ones and as a result, there is more fraud. This helps to lead to a high-risk classification.

One of the highly problematic aspects of the Forex industry is its use by certain individuals who are involved in money laundering. The news is replete with instances of individuals laundering their ill-gotten money via the Forex industry. As such, your business will need to be extra careful to take any risk-reduction measures that are necessary to prevent this laundering from happening. Unfortunately, even the most well-prepared business can unintentionally participate in a money-laundering scheme and this helps to explain why many merchant account providers have classified the Forex market as a high-risk one.

This industry also seems to have a comparatively high percentage of investors who ultimately are unhappy with their transactions and try to nullify them by claiming fraud and pursuing a chargeback. This adds to the risk of the industry.

So, what does this mean? The biggest challenge for your Forex business is that you will face higher-than-average credit card and bank processing fees. The high nature of these fees is meant to offset the risk that a merchant account provider will theoretically be engaging in by doing business with a high-risk merchant.

The specifics vary depending on the contract that you negotiate with your vendor, but there is no question that these fees can eat into your profit margins and make operating a Forex business much more expensive.

Can I Access Merchant Account Services?

Yes. Despite the difficulties presented by creating a Forex business, you will still be able to access merchant account services. You will have to look extra hard to find a vendor who is experienced in this area and capable of understanding the unique needs and challenges of your business. This means that you will likely have to pay a higher fee for these services and this makes it even more important that you look as hard as possible for a merchant account service that can provide you with access to a maximum amount of services at an affordable price. Failure to do so may result in unnecessary charges and headaches for your business.

In a high-risk business like Forex trading, accessing Forex merchant account services simply isn’t enough. You need to find someone to help you manage your account who is experienced in dealing with high-risk vendors and can help provide you with a variety of products and services that can drive your costs down. Remember, when there is a chargeback or fraud, it doesn’t just cost your vendor money – it costs you money, too! As such, it’s in your own best interest to identify a high-risk vendor who can help you reduce your costs. This means that you have to approach finding a merchant account provider with a different mindset than many other businesses. This isn’t about simply processing transactions, but reducing your risk, saving you money and allowing you to reinvest those dollars into your business.

How Can a Merchant Account Provider Work With a Forex Business?

Some of the ways that a merchant account provider should work with a Forex brokerage are screamingly obvious. Most important, of course, is the need to take payments.

Payments can occur in many ways.

First, they can happen via a credit card, meaning that your merchant provider will need to have excellent and secure merchant account processing software. Alternatively, there are ACH payments, which are payments that occur directly from one bank to another. Depending on the size of the transactions and the specific interests of your client, it may be preferable for you to make a payment this way – indeed, this is how many other brokerages operate. In some cases, you may also need to be prepared to work with physical checks or eChecks. You may also need to be prepared to work with other payment processors, like Stripe or PayPal.

All of the above isn’t enough.

This is because of some of the unique challenges of the Forex industry.

Forex business often occurs internationally.

This means that your merchant account provider will need to be prepared for alternative and less frequently used forms of payment. For example, the use of crypto in making Forex payments is becoming increasingly popular. Depending on the size of your business and specific customer demand, it may be worth it for you to pursue this option of accepting financial payment. You may need to find a merchant account provider who can handle accepting payments from offshore merchant accounts. This can ensure that your clients and customers can make payments in a manner of their choosing.

Your merchant account provider must be capable of taking payments in foreign currency.

There will be added fees for you, here, as you will ultimately need to exchange that money back into U.S. currency. As such, you should inquire about these fees with your merchant account provider.

What Else Should I Look For in a Forex Merchant Account Provider?

All of the above is the bare minimum you should expect out of any merchant account provider and there is no question that a provider who can give you all of these services will be able to help you process transactions. Competition for your business is fierce and you should expect much more out of any provider.

Fraud prevention and chargeback protection will be critical to your success as a business – particularly if you are in the Forex industry. As such, when considering your merchant account providers, ask what sort of expertise they have in fraud prevention and chargeback protection. How much do they charge you in chargebacks? What happens if there is a fraudulent charge and what will repeated instances of fraud do to your processing rate? What advice and expertise can they offer you in terms of reducing your fraud? How robust is their security? Have they ever had any data breaches? If so, how were those managed? 

What sort of eCommerce options do they have and how will these various eCommerce options alter your final rate of payment? Do they have a preferred merchant that they have connections with, resulting in savings that they can pass along to you? 

Some Forex businesses still operate physical locations. If this is the case, can they provide you with the necessary point of sale equipment? How is a physical transaction rate different from a digital purchase? 

What sort of integration assistance can a merchant account provider offer to you? When they provide your records of transactions that they have run and fees that they charge you, does that information easily integrate into your already existing records? How easily can you export the transaction information for accounting, tax, and regulatory purposes? If they don’t have the already existing integrations with whatever software you use, do they have the programming expertise that will allow them to create an API for this integration? How much will they charge you to do this? 

Does your merchant account provider go above and beyond what you need? For example, if you are a business that is looking to expand, can they provide you with the necessary access to capital that will enable you to grow your footprint and enter more industries? 

Your Forex business needs a merchant account provider who can do more than just process credit cards. You need a vendor who has experience at high-risk markets, experience in the Forex market and the knowledge to help you reduce your risk and keep as much of your money as possible. At Zenti, we are experts in all of these areas and can help translate our expertise into more money for you. Contact us today for more information on how we can help you.