Why is it so hard to open accounts for ecommerce merchants

Opening an account for credit card processing or a payments gateway is becoming harder and harder for ecommerce merchants.

The online industry has changed drastically in the past 10 years. This has also lead to change in the behaviour of online payment gateways and ecommerce merchants. This has lead to a big impact on the opening of accounts and merchants being excluded from the system.

Here are my top reason for why opening accounts is now harder:

The number of ecommerce sellers is going up and so is online fraud attempts

I read statistics claiming that everyday nearly 40,000 new ecommerce sellers come on to the market. It has become so easy to setup shop or sell online via marketplaces. This has lead to huge demand for new accounts and at the same time huge increase in fraudulent ecommerce sellers. Payments gateways are afraid of these new ecommerce sellers and how to deal with them.

Online fraud is on the way up

Tying into the previous point. As its become so easy to setup shop. The number of fraudulent ecommerce sellers has also shot up. A fraudster can create an online presence in a few hours and potentially scam hundred of people for thousands of dollars within a few days. Payment gateways are very worried about this and take a cautious approach to new ecommerce sellers.

Its hard to tell the difference between good vs bad ecommerce sellers

For a merchant credit card processor or payment gateway, its nearly impossible to tell at the beginning if a new merchant is “real” or some kind of fraudulent scheme. New businesses lack data in terms of legal form or a good reputable online presence.

Understanding customers from a different countries is hard

It used to be that payment gateways only operated in their own country. As we have gone global so have merchants. Payment gateways are afraid of foreign customers as they don't understand the legal systems in the country, the business practices, or how to tell the good vs bad merchants for their behaviour. Then there is also the basics, documentation is different across countries and not always easy to understand.

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