- March 24, 2021
- by TradeSoft
- Forex Account
- 0 Comments
In literal terms, Forex stands for Foreign Exchange. It is a global market where foreign currencies are bought, sold, traded, and speculated on. This market is the largest and most liquid of all markets worldwide as it sees over a dollar five trillion transactions in a day. At the same time, it is open 24×5. On the other hand, the Forex market operates along with two different types of business models. The first model involves currency trading on the interbank market, where banks are the ones who conduct the trading activities. The second model caters to individuals who trade currencies through brokers or trading platforms on the over-the-counter market.
In this context, Forex merchant accounts are mainly for forex brokers and traders. A merchant account enables you to accept credit and debit cards from traders and to take advantage of alternative payment methods as a whole.
To get a merchant account, you need to have your forex business legal and corporate headquarters present in that country. On the other hand, to secure your merchant account, you should present your revenue earnings to the acquiring bank. Furthermore, to impress the bank, you will need to have three to six months of processing history and a low overall chargeback rate.
If you don’t have any processing history, then 2-step authentication such as 3-D Secure will serve as an additional layer of payment security. However, note that two-step authorization mechanisms can be a real conversion-killer. So, when looking for the appropriate payment processor for your Forex business, see if you could find one that offers a more conversion-friendly version of this feature. For example, some payment providers offer more subtle, non-invasive versions of 3-D Secure. A proper authentication system will help you maintain a low chargeback rate while boosts your conversion rate.
Fraud and chargebacks are a prevalent problem for highly profitable businesses, and as such, these issues are common in the Forex industry. Unfortunately, high levels of fraud and chargebacks make acquiring banks reluctant to work with you, as they worry you might become a liability down the line — this is also part of the reason why your Forex merchant account is considered high risk. Thus, it is crucial to eliminate these revenue-jeopardizing issues. Just find a payment processor who specializes in providing high-risk merchant accounts. They will understand the Forex-related challenges you face. Also, they consequently help you resolve them sooner than if you were to work with a processor.
Generally, the forex merchant account sees a higher rate of fraud and chargebacks. At the same time, many forex platforms do not require a license. Sometimes, the FX merchant account is at high risk because of the increase in chargebacks. To avoid all these, you should get your forex merchant account licensed. If you have the necessary license, it is easy to get a forex merchant account.
It’s crucial to find a payment provider who knows your industry’s specific needs and who’ll implement smart anti-fraud filters. Thus, it will be able to distinguish your legitimate customers from fraudsters. However, on the other hand, anti-fraud filters can grow to become overly sensitive, leading to a decreased payments’ acceptance rate, lower conversion rate, and frustrated customers. It is also something to keep in mind, especially since operating a Forex merchant account, you likely see significant spikes in payment processing — this, in turn, puts your merchant account at risk of being inaccurately flagged for fraudulent activity.
To avoid this, talk to your chosen payment processor and try to find the right balance between the two. Lastly, to get your Forex merchant account function properly, you can easily consider putting a limitation on some of your customers. To make your merchant account function properly, always get it validated by the government of your country.