Based in Europe, Cashtronics specializes in processing payments for high-risk merchants through a secure, flexible and cost-effective solution that provides individual merchant accounts with rates starting at 3.5 percent.
According to Cashtronics, too many merchants risk their time, money and reputation with an Internet payment service provider that it claims illegally aggregates merchants.
"A merchant should take the time to find out as much as possible about the IPSP they operate with or plan on working with," states a company release. "These days' merchants too often focus on the bank rates offered rather than the reputability of the IPSP, the security of their transactions and the problem of merchant aggregation."
The company advises that one of the most important things to find out about an IPSP is if each merchant will receive their own merchant account and contract with the bank.
"If a merchant is not provided with an individual merchant account number there is every possibility that the IPSP is aggregating merchants," stated a company release; which went on to describe merchant aggregation as an IPSP grouping many different merchants under one master merchant account — a practice which it claims is illegal under MasterCard and Visa regulations as well as under PCI Compliance rules — and which can lead to serious consequences that put a merchants business at risk.
"When [not if] an IPSP is caught aggregating the consequences are catastrophic for a merchant. The acquiring bank is given a huge fine which in turn leads them to freeze all the funds in the account and stop any further processing," Cashtronics warns. "All the merchants' funds are held and their capacity to process cards via that IPSP is terminated. These funds may never be recovered or at best, it may be years before the bank actually releases the funds to the IPSP who could be bankrupt by then."
"Over the last few years we have seen a sharp increase in the number of merchants coming to us requesting their own legitimate merchant account number after being cut off from Visa and MasterCard through no fault of their own," Cashtronics CEO Carl Buchalet said.
Buchalet recommends that merchants ask their Internet payment service providers if they are PSP PCI-DSS 1 certified; if they will receive their own merchant account; and if they will be required to sign a contract directly with the bank. He also cites what the descriptor says on the client's credit card statement as an important consideration.
"Will it be your company or the IPSPs name?" Buchalet asks, adding that in which case the IPSP may be aggregating.
"Who is wiring you the funds, the IPSP or the bank?" he added. "Whoever is handling your funds must be in good financial health."
Buchalet also warned that when looking for an IPSP, if the application process is easy, there is something wrong.
"Good Internet payment service providers will require a diligent compliance process before supplying a merchant account to an individual merchant," he concluded.
