A complete guide on virtual IBAN accounts and how to open one as a high-risk companyContinue reading
The CBD industry is growing at an exponential rate. In fact, the global cannabidiol market size was valued at USD 2.8 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 21.2% from 2021 to 2028 .
A large number of CBD agencies are now opening up all over the world. CBD is becoming popular because people are becoming more aware of its applications, including the treatment of sleep disorders, stress and anxiety, pain relief, and other conditions .
However, the industry also faces a number of challenges including lack of regulations, payer-carrier issues, and banks not being willing to work with them.
Here we’ll discuss some of the challenges they face in highly regulated markets and what CBD agencies can do to overcome these issues.
Challenges for CBD Businesses
Credibility and Transparency
The CBD market is still largely unregulated. This can be seen as both an advantage and a disadvantage for businesses within the industry. There are high risks associated with doing business that isn’t entirely legal worldwide, but it also allows for substantial growth opportunities because many agencies have not yet cornered the market.
When entering into new industries, especially those that are risky or potentially dangerous, you want to be able to build credibility with your customers through transparency. If you want people to trust you enough to send their money your way, they need to know that you are both legal and transparent about who your business is. CBD agencies must build credibility with their customers through transparency in order to compete.
High-Risk Merchant Accounts
As the CBD industry becomes increasingly more saturated, it’s becoming harder for new CBD companies to enter into markets where there isn’t already an established brand. New businesses often rely on high-risk merchant accounts to help expand their agency easily and start making sales immediately upon opening shop.
Unfortunately, banks tend to not be too keen on accepting CBD companies as clients because of the legal status of CBD products across many countries around the world. This means that opening a bank account can be challenging for new CBD companies or require them to partner with other services providers who can help them get a high-risk merchant account. CBD companies must seek alternative payment systems in order to open a high-risk merchant account or find alternative high-risk networks that will work with CBD clients.
In the same way that banks don’t want to deal directly with CBD agencies, many online gateways also proactively try to avoid these businesses because of their legal status and the risk of fraudulent activity that exists within this industry. Online payment gateways are accepted by most customers as low-risk options for making purchases, thanks to established trust between customers and the gateway providers.
If you’re trying to make sales via credit card payments but can’t use an online gateway, you’ll severely limit the number of potential customers you can serve. CBD companies seeking to make sales online should look for proven credit card payment gateways that specifically work with high-risk businesses so they can accept payment without having to go through additional measures.
Blockchain technology has the potential to revolutionise the financial industry completely, and particularly how CBD agencies do business. Cryptocurrencies provide instant transactions between two parties while also providing a high level of security.
Many CBD agencies are now accepting cryptocurrencies as an alternative payment method because it allows them to transact globally while making sales instantly in a low-risk manner. The only drawback at this time is that many merchants must pay steep transaction fees when using cryptocurrency, but this may soon change if more mainstream adoption occurs.
The cannabis market is the driving force behind the CBD industry in many respects, but this can be a double-edged sword when it comes to payment. Many countries have made CBD completely legal while also banning all other types of cannabis at the same time, creating confusion among consumers about what’s allowed to be purchased where.
This leads to CBD agencies having difficulty promoting their products because of uncertainty around legality between country jurisdictions, which makes it difficult for them to invest heavily in advertising or marketing materials. It also means that healthcare professionals are hesitant to recommend CBD products due to concerns about efficacy because there’s no way for them to know if the CBD has been sourced from hemp or cannabis crops. It’s important for CBD agencies to consider these problems when deciding on how they accept payments.
What to look for in a CBD Payment Processing Gateway
CBD industry owners need to choose a platform that helps them manage their businesses more efficiently, provides the customisation needed for their loyalty programs, and has integration capabilities. The right CBD payment gateway can offer POS (point-of-sale) integrations, allowing CBD companies to set product discounts, send email receipts, and even provide convenient order tracking.
The best high-risk merchant account provider for CBD businesses ensures they are compliant with all regulations, which means offering your customers 3D Secure credit card processing or Verified by Visa services, among other features. Your high-risk online merchant account service should offer 24/7 support as well as offer SSL encryption security protocols that will protect both you and your customers from fraudsters.
We’ve shared our top tips for choosing the best banking provider for high-risk merchants.
Achieving growth in highly regulated markets is possible with the right CBD payment gateway. CBD industry owners need to look at their business needs and choose a platform that can produce results.
At Capitalixe, we provide CBD companies with high-risk merchant account services allowing you to accept transactions whether your business is online or offline.
Our experts can guide you through the entire CBD payment gateway setup process and help you find the most suitable solution for your needs. It’s never been this easy!
Get in touch to set up a free and non-obligatory consultation and learn more about how we can help resolve your payment and banking challenges today.
In the business world, risk is unavoidable. But while all businesses have some degree of it, several factors make some industries riskier than others.
Banks and financial institutions evaluate your industry and categorise it into either high, medium or low risk. If you are perceived as a business in a high-risk industry, many banks and financial institutions are likely to refuse your request to open a merchant account or to set up payment methods with them.
If banks and payment processors do choose to work with high-risk companies, they often charge them a lot more in rates and fees. Plus, these companies may have to give up a portion of their daily transactions. This is known as a rolling reserve.
So what makes an industry high-risk? And how can businesses open high-risk merchant accounts and access high-risk payment solutions if they are in this category?
High-risk merchant accounts?
A high-risk merchant is an identification by a Card Processor of a business that operates in a high-risk industry, sells products or services that experience a high level of chargebacks, is prone to fraudulent transactions, and receives stolen credit cards .
This means that, as well as your company’s financial health, banks and payment processors also make their decision based on the industry you operate in.
Industries that are considered high-risk
CBD products are becoming legal to produce and sell worldwide after their medical benefits were discovered. Each country has different legislations around its use. For example, CBD can be consumed in the majority of EU countries. According to EU law, hemp growing and selling is permitted if the THC content is less than 0.2% . Countries outside of Europe have legalised or are legalising CBD, including Canada, Russia, South Africa and the United States of America.
The main reason why this industry is considered high-risk by banks and payment processing companies is that the industry’s legislation is constantly changing. Businesses have to navigate through unclear regulations regarding how CBD can be sold in various countries. Brexit also had a massive effect on the UK market, as there are now further regulatory restrictions they must meet .
According to a report by Research and Markets, the online gambling industry is expected to reach $72.02 billion by the end of 2021, at a compound annual growth rate (CAGR) of 12.3% . The gaming business merchants offer many different forms of gambling, including casinos, sports wagering, online poker and mobile gaming.
There are a number of reasons why this industry is considered high-risk to banks and payment processors. Firstly, a lot of online gambling businesses are based in offshore jurisdictions like Malta, Isle of Man etc. Because of this, the industry often falls victim to fraud and money laundering suspicions. There’s also a high volume turnover associated with this business, so banks are cautious about offering merchants a credit line.
The global adult entertainment market is estimated to exceed the value of US$ 300 Bn by 2030, expanding at a CAGR of ~5% during the forecast period . This includes companies that deal in toy and novelty sales and dating services, telephone services, adult and live stream services.
Many of these companies struggle to obtain a merchant account, and they need this to accept credit and debit card payments from customers and clients. This is because a lot of them are subscription-based services. This means that customers pay on a minute-by-minute basis. Banks are also sceptical about getting involved with this industry because there has been some unfortunate coverage surrounding this industry, relating to illegal activity. Because of this, many payment processors fear there will be a reputational risk associated with this industry.
Financial institutions encompass a wide range of business operations within the sector including banks, trust companies, insurance companies, brokerage firms, foreign exchange and investment dealers .
This industry is categorised as high-risk because working with other financial institutions requires a lot more due diligence. Payment processors need to ensure that the financial intuitions they work with strongly comply with regulations. Plus, financial institutions are much more prone to money laundering. This risk is heightened if their clients are also categorised in a high-risk industry.
Mainstream banks are a lot more hesitant to work with crypto companies, with many unable to accept this new age style of payment method. Cryptocurrency is known for wanting to be unregulated and not tied to any government. Because of this, banks are far less likely to want to work with them. Plus, many payment service providers associate crypto with international criminal organisations and money laundering, which stops them from working with these companies.
Sign Up For Payment Processing For High-Risk Merchants
Although many banks and payment processors refuse to work with high-risk businesses, there are definitely still ways to receive a number of merchant solutions. Choosing the best high-risk merchant account is crucial, and you want to ensure that you’ve done enough research and ideally work with a company that specialises in these industries.
At Capitalixe, we bridge the gap between your business and the financial institutions you choose to operate with. We can provide several solutions, to help businesses open offshore high-risk merchant accounts, forex merchant accounts, and bank accounts for gambling businesses.
Based in London and operating internationally, Capitalixe is a payments and banking consultancy specialising in helping companies in high-risk industries obtain the latest financial technology.
Our team brings a wealth of experience and industry expertise, leveraging our network of trusted providers for the benefit of our clients. Fintech has brought a wealth of products and efficiencies to businesses and individuals – matching these opportunities to our client needs is at the core of the Capitalixe ethos.
Get in touch to set up a free and non-obligatory consultation and learn more about how we can help resolve your payment and banking challenges today.
Because of the rise in fraudulent and scam activities, more and more individuals are becoming extra cautious about disclosing their financial information to other parties. All of the major corporations and enterprises are attempting to devise methods of making safe payments without having to worry about their data being compromised. One of the most popular and secure methods has been presented by technology professionals and has been widely used.
The Payment Gateway is the name given to this system. The purpose of this article is to provide you with all the necessary information regarding this technique, including whether or not payments made during certain periods will be beneficial to your company in any kind. So, let’s get started.
What is a payment gateway?
Payment gateway for high-risk merchants is technology that enables businesses to accept payments made by credit and debit cards from their consumers. Through the facilitation of safe digital transactions, they assist not just online companies but also businesses with physical locations. Investment in a payment gateway not only protects your company from liabilities, but it also allows you to welcome new clients by accepting payments via a variety of ways. For companies looking to scale their business, a high-risk merchant account would be the best to save the merchant from greater risk of fraud.
How does a payment gateway work?
The payment gateway procedure is straightforward—especially if you invest in the appropriate technology or service provider. The following are the stages involved in the whole process:
Step1- An order is submitted by the client. There are many options for this, including online or at a physical shop, in which case you would be placing the order for them.
Step2- The data is encrypted via the use of a web browser. The information provided by the consumer (if they are buying online) is sent securely from their browser to the merchant’s web server using SSL (Secure Socket Layer) encryption.
Step3- It is the merchant’s responsibility to transmit transaction data to the payment gateway. This is also accomplished via the use of SSL encryption.
Step4- The transaction is sent via the gateway to the payment processor. The payment processor connected with the merchant’s acquiring bank is notified of the transaction details and receives them.
Step5- Once the transaction has been completed, the payment processor transmits it to the card association for processing. VISA and Mastercard are only a few examples of card organisations.
Step6- The transaction is verified by the bank that issued the credit card. If the request is accepted, the bank will acknowledge receipt of the request and provide a response number for the transaction. If your application is denied, the bank will give a reason, such as inadequate money, to explain why.
Step7- The issuing bank provides a response code to the payment processor, which the payment processor uses to complete the transaction.
Step8- The payment processor transmits the code to the payment gateway, which then sends it to the customer.
Step9- In order to complete the transaction, the payment gateway provides a code to both the business and cardholder.
Despite the many stages involved, the whole payment gateway procedure is completed in a matter of seconds rather than minutes. It is a safe and convenient method to take payments from consumers, regardless of whether they engage with your company online or in person.
What level of security does the payment gateway procedure provide?
One of the most significant advantages of utilising a payment gateway is the high level of security it provides. According to Pixelmattic, major card associations have established a set of regulations and security requirements, known as the Payment Card Industry – Data Security Standard (PCI-DSS or PCI), that must be adhered to by anybody or any organisation that has access to sensitive credit card information. All payment gateways, in turn, must satisfy these criteria in order for the service business to connect with payment processors. If they are not authorised, the service company will not speak with them. You will be shielded from any liabilities or fraudulent transactions as long as you are utilising a secure payment gateway for your business operations.
Importance of Payment Gateway
The importance of a payment gateway to any business and e-commerce website can be explained by a variety of factors. According to a research conducted by Shape Security, 90 percent of all login attempts to online stores and companies occurred as a result of unauthorised hacking efforts throughout 2018. Payment gateways are crucial for preventing hacking efforts such as this one, and they are particularly important for small and medium-sized companies.
The following are some of the most significant benefits that both large and small companies and eCommerce sites may get from the use of a payment gateway:
1. All the alternative online payments are accepted
A payment gateway is a tool that allows merchants and business owners to accept and process payments made using credit cards and debit cards, among other methods. It also opens the door for companies to accept alternative forms of online payment that may become accessible in the future. The increased number of payment alternatives makes it simpler for company owners to meet the diverse requirements and expectations of their customers.
2. The risk of Credit Card fraud is reduced
Payment gateways are primarily intended to reduce the occurrence and potential of online payment fraud, which is why they are so widely utilised. Payment fraud is a problem that online companies and merchants often face when processing transactions that require the usage of credit cards to collect payments from consumers. Using a payment gateway, companies may benefit from specific security measures that guarantee that both the operators and the purchasers have a safe and secure means of processing information, money, and the entire transaction.
3. Smooth site surfing
Some payment gateways provide a feature that allows companies to create unique checkout pages for their customers. Customers will no longer be required to be transferred to another website when placing purchases or making payments as a result of this.
4. Customer data is in safe hands
Security and encryption of consumer information are enhanced by payment gateways. Because of the increased level of client security, it is highly recommended as an additional layer of protection against online fraud for online companies. Businesses that use payment gateways often get positive feedback from the vast majority of their consumers.
5. Easy installation and maintenance
The fact that a payment gateway may be completely automated means that it does not need frequent maintenance or a hefty installation price. The majority of payment gateways simply need companies to establish an account before the software can be activated. Frequently, further software upgrades are planned, and companies are notified when it is time to upgrade their current payment gateway.
Where to find the best Payment Gateway?
There are a variety of payment gateway service providers accessible, and it is the duty of online company owners to identify and choose the payment gateway that best meets the requirements of both their business and their consumers. Furthermore, they must consider the safety of their website as well.
Payment gateways that are reliable and efficient should be equipped with SSL certificates issued by authorised organisations in charge of validating the gateway’s credentials to operate. Payment gateways must also be PCI-compliant and adhere to policies and procedures that ensure the security and privacy of customer information throughout all transactions.
The success of an online company may be guaranteed while at the same time ensuring that client pleasure is completely satisfied by carefully selecting a trustworthy and appropriate payment gateway. In addition, business owners may develop a checklist that outlines the requirements of their company and consumers, as well as their firm’s previous errors in online transactions, if this is beneficial.
We hope that this article has provided you with a good understanding of how Payment Gateway for high-risk merchants would work. If you would like some further insight on the best payment solutions available for your business, please don’t hesitate to get in contact for a free and non-obligatory consultation.
The IBAN, in general, is that unique code that helps identify a particular bank during a cross-border transaction. You must know the IBAN of your beneficiary to ensure that you are receiving the money properly.
If you are doubtful about the IBAN or input the wrong one, it is most likely that the beneficiary bank will restrict the transaction. Moreover, you will be charged a retrieval fee against the failed transaction. In this post, we will give you details about virtual IBAN, which is more important in the era of digitisation. Besides, it is highly beneficial for high-risk businesses in the UK. Let us now dive into more details.
A virtual International Bank Account Number or virtual IBAN is a non-tangible account issued to a person to receive and send money from one country to another hassle-free.
Having an IBAN means that you do not need several bank accounts to carry out international transactions. That’s also the reason why high-risk merchants prefer to use an IBAN to make payments and receive money from other countries. Moreover, not having to maintain too many physical accounts saves so much time and money too.
Virtual IBAN- What is the meaning?
For any high-risk merchant across Europe, having a proper bank account is mandatory, especially if international transactions are taking place. However, it is often very challenging to manage international transactions using only the local bank accounts.Moreover, it is very tedious, time-consuming, and costly due to the constantly changing monetary transaction policies and total resources.
IBAN is that unique number that is part of a standardised international banking system capable of identifying overseas bank accounts. The concept of IBAN was first introduced by the ECB or the European Committee for Banking Standards.
The same body developed and also implemented the IBAN concept to make the process of international payments smoother. A proper IBAN can be divided into distinct parts that are all mandatory. The first two digits make for the country code, then there are two numbers, and the rest are 30 alphanumerical characters.
When the concept of IBAN was introduced, it was supposed to be used especially for cross-border transactions within Europe only. Gradually, other countries also started adopting the concept, which is now used extensively worldwide. Licensed under ISO 13616:1997, presently, the Caribbean and Middle-Eastern countries apart from Europe are the ones that use IBAN the most. These are also countries where high-risk businesses such as gambling and casinos are more popular.
Since virtual IBAN is merely a verification process, you will have to stop using an existing account number under no circumstances. Instead, when you require an IBAN, the bank will issue additional details that have nothing to do with your existing bank account. While IBAN is highly beneficial for high-risk merchants, it may not be the best option for organisations carrying out massive amounts of international transactions.
Each IBAN account is usually linked to a single primary account, which means that irrespective of the amount of money exchanged, all of it will automatically route to the primary account. Also, while using IBAN, one of the most difficult situations is when you have to keep track and reconcile various incoming payments made by clients sitting at multiple locations across the world. Now, virtual IBAN comes in at this point because it can sort out the various transaction sources.
An IBAN permits high-risk businesses to specify unique virtual details to receive money from various clients. This can be for specific currencies and product lines that will be redirected to a primary or master account. As a result, it is now possible for a business to carry out important transactions without the requirement of multiple physical accounts, which are highly expensive and tedious. Of course, the concept of IBAN and virtual IBAN is the same, but the latter has several benefits, especially for high-risk businesses.
What is the advantage of using Virtual IBAN for high-risk businesses?
Here is a list of the most common benefits that high-risk businesses have when using virtual IBANs.:
Setting up a business account is easier
Setting up a virtual IBAN account is basic and direct. Any entrepreneur comprehends the long and regulatory interaction of setting up a conventional account. For instance, in many nations, you must dwell in a nation to have a minimum financial balance. Such prerequisites are not restricting when managing virtual IBAN.
Improved transaction management
Your business can set up an actual solitary record and acquire numerous virtual IBAN accounts, which course to the one real ledger. Accordingly, the organisation can copy the impacts of having various records, in numerous nations, for various exchanges. You can set up virtual records for every customer making instalments, or for every instalment made in particular money, or for a particular product offering.
The business will want to get independent proclamations for each virtual IBAN, which improves on explanation compromise. Having separate articulations will empower your business to effectively find every instalment, henceforth simple investigation and recognisable proof of exchange designs.
Opening and running various records in various nations are tedious and arduous as well as expensive. Envision the kind of banking expenses a business will pay to run 20 records! It’s anything but a ton of cash.
For Instance, Smiths Autotech of India, a provider for Mercedes Benz, sells 2 million yearly to the vehicle producer, yet the bank charges are just about as high as 8% in FX.
This organisation used to lose 12% of their monthly revenue in bank fees! In any case, since they embraced virtual IBAN, the expense has extraordinarily dropped. Virtual IBAN empowers organisations to make numerous virtual records that serve practically as actual records while staying away from the high FX charges for exchanging over each instalment that comes in when utilising the account.
Virtual IBAN works with one real record. Consequently, settlement and steering of instalments are a lot quicker than in the actual record.
Security is a vital angle when managing monetary records. Having numerous records opens the proprietor to more dangers. As the administration gets dreary when running numerous real records, the shots at committing network safety-related errors also increment.
A virtual IBAN, nonetheless, is kept in redundant, encoded cloud servers. In this way, they have a generally safe of misrepresentation or vacation. The start to finish straightforwardness and isolation offered by virtual IBAN likewise make it simpler for organisations to follow Anti-Money Laundering (AML) Know Your Customers (KYC) security guidelines.
High-risk businesses that are presently using virtual IBAN have a competitive edge over others. These organisations are now saving a lot of money that would otherwise be required to maintain multiple physical accounts. Moreover, there is added transaction security now. Well, these may look like basic factors but are make or breakpoints in the industry.
How we can help you
Capitalixe is a leading banking and payments consultancy that is based in London and operates globally. With the help of Capitalixe, it is now possible for all businesses to access financial technology, payments and banking. Whether you are a start-up, a crypto, or gambling business or simply looking to enter into a new market, we have got you covered.
We leverage our network that we have with over 80+ financial institutions, EMI’s and banks worldwide.
The ultimate goal of the team here is to help take the pain away from our clients in finding a trustworthy and suitable solution that is happy to onboard their business. We understand these sectors very well and know how difficult and time consuming it can be to find a good provider.
Feel free to reach out to us for a complimentary consultation, we will be more than happy to help you.