Main concerns of merchant account opening process
Choosing to operate in a high-risk industry is often an easy decision for a business owner, as high risk typically means high potential ROI. However, industries are not classified as high-risk based on potential profits but rather on the presence of factors posing safety risks to clients and potential for money laundering by dishonest users. This is why gaming platforms are considered one of the most high-risk types of businesses, as they provide access to thousands of users daily, and some could use this access and transactions for scamming purposes.
This creates certain challenges for gaming operators in obtaining payment processing and bank accounts. Today, we will discuss the main steps to open a merchant account in high-risk industry. Among these steps, finding suitable partners and negotiating potential collaborations stand out. This stage is not very difficult if you know what you are looking for. With good research, you can quickly identify suitable payment providers and start a negotiation with them. The next step will be compliance check of your business. Let's delve into this stage in more detail.
What is compliance process?
First, it is essential to understand what to expect when opening an account with almost any licensed payment system or online bank. The compliance procedure, literally means what it sounds, having the payment system verifying that all potential clients comply with rules and regulations of payment processing and the laws of countries where business operates. This is especially important in the online environment, as counterparties do not see each other and communicate remotely, making it necessary to ensure that business is as represented, to avoid deception.
Although it should be noted that sometimes merchants intentionally engage in dishonest actions to deceive financial system and obtain more favorable cooperation terms from payment system. Merchants may hide their true motives or actual websites, not disclose their business monetization system or full details about themselves, knowing that these could deter banking institutions. Often, when a business operates in a shady zone on the edge of legal acts. We strongly advise against such practices not only because they are unethical but also because they are illegal and will not lead to any good outcomes. Companies engaging in such behavior will be blacklisted by payment systems and banks, making it almost impossible to find new reputable partners. Deception during the compliance process is strictly prohibited and will permanently damage your business's reputation.
However, in other cases, honest merchants may fail the compliance procedure due to a lack of knowledge in this area and incorrect preparation of documents, which form the basis of this bureaucratic process.
Filling out questionnaires and providing a set of important business documents in the correct format is the first stage of compliance, which will determine whether your company will proceed to the next stages. In subsequent verification stages, your business will be reviewed more closely. Payment system employees will verify all the data you provided against open and closed sources, compare it with available databases, and ask you a series of clarifying questions. The entire process can take from several weeks to several months, depending on the complexity of your business and its structure. If you have created a complex corporate structure involving multiple legal entities, all of them must be verified. This also helps exclude the involvement of the company or its officials in illegal activities, the presence of sanctions, or legal proceedings.
In addition to basic questions, it is necessary to examine business model, all its nuances, and determine that it does not violate legal norms and is honest towards clients. Based on all these facts, a decision will be made on opening a merchant account for your business — positive or negative. The outcome will depend on you and the specific features of each payment system and its willingness to cooperate with different types of businesses. To maximize your chances of opening an account, collaborate with professionals from Monoup. We handle all compliance processes from start to completion, conduct negotiations with payment providers, ensure the correct submission of information, and ensure you have all the necessary documents. This will help reduce compliance process time and avoid critical errors that negatively impact company's profile.
AML and Financial Monitoring
Delving into the nuances of procedure, compliance framework is based on the AML system and financial monitoring, which will continue to accompany your activities in the financial world.
AML (Anti-Money Laundering) is a set of measures aimed at preventing money laundering activities and hindering them if detected. This ensures that any illegitimate money flows can be identified and stopped, ensuring the security of financial system and excluding fraud. AML procedure is fundamental in online transactions, as we mentioned earlier, when counterparties do not see each other, it opens a window for various manipulations.
Payment systems, as participants in the economy, must follow all AML regulations to operate and maintain their licenses. Financial monitoring can be considered part of the overall measures in this direction. It involves checking all payments processed by the system, both incoming and outgoing. If payments appear suspicious, the payment system may cancel them or request explanations. Thus, it is important to understand that the compliance procedure is only the first stage of your interaction with any bank or fintech. In further cooperation, all your operations will also be subject to constant verification.
Conclusions
We hope this article was not too complex or boring for you, although we understand it might have been. Nevertheless, we believe it is important to convey the real nature of processes in financial environment, as this will help you better understand causes and consequences of events and be prepared for the processes you will encounter.
In reality, opening a merchant account can be extremely challenging, especially for high-risk type of businesses. However, with proper support of experienced specialists, everything is possible within a reasonable timeframe. We provide services for opening accounts and passing compliance in payment systems worldwide. Contact us to know more about it.
