Florida Laws on High-Risk Merchant Accounts

Laws that Govern High-Risk Merchant Accounts in Florida

Florida is favorable for entrepreneurs for a variety of reasons – it is touted as one of the best states for business because of its excellent business tax structure, competitive fees, and pro-business state tax policies. Florida’s economy has also grown consistently over the years and it is welcoming to almost every type of business, even those that are tagged as high risk. So if you’re starting a high-risk business in the Sunshine State, you should understand the Florida laws on high-risk merchant accounts.

What makes you a high-risk merchant?

Florida shares the same rules with other states in determining a high-risk merchant. You will be tagged as such in the state if you belong in an industry that’s considered high-risk such as adult entertainment, nutraceuticals, or credit repair.Other factors include having an average credit card transaction higher than $500, a monthly sales volume of more than $20,000, a bad credit history, and excessive chargebacks.

What fees can a high-risk merchant expect?

Applying for a high-risk merchant account in Florida means that you will be paying more than the typical business. Depending on the credit card processor or payment provider, you may need to pay a setup fee, a monthly or annual fee, and sometimes even a PCI fee. Since you are required to have a longer contract, the provider may also charge you an early termination fee if you cancel the account before the contract is up.You are also required to have a rolling reserve, which is 5-10% of your credit card processing volume that’s kept on hold for up to 6 months. This is a way for payment processors to protect the bank and themselves against fraud and chargebacks from your end.Yes, it could be a pain, but your money will be released to you after the agreed time.

What should you know about surcharges and convenience fees?

For many years, Florida law has prohibited merchants from adding surcharges for credit card payments.The law explained, in part, “…a seller or lessor in a sales or lease transaction may not impose a surcharge on the buyer or lessee for electing to use a credit card in lieu of payment by cash, check, or similar means, if the seller or lessor accepts payment by credit card…”Last year, however, this law was abolished, allowing merchants to impose surcharges for credit card payments. This means that you can now encourage your customers to pay in cash so they don’t have to pay for that surcharge.You can even give discounts to those who opt for a cash payment option. This strategy is actually a win-win situation for both you and consumers because you can cut back on the risk of chargebacks by accepting cash and your customers can save money on their purchases.

The bottom line

Whether you’re from the Sunshine State or not, it’s very important to learn the laws that govern high-risk merchant accounts in Florida so you can follow the rules and avoid any penalties. You can also build and maintain your credibility so that, one day, you can be tagged as low-risk.Contact us today to help you set up a merchant account for your business.

Alexander Ellis( President )

My interest in the financial world started to blossom in High School. However, my parents tell me I use to watch financial programs before the age of 5. So, I guess I was born with the Financial bug. In high school I was accepted into their Finance Academy, which I attended for 4 years. In addition to graduating high school, I accumulated a substantial amount of financial knowledge few people experience at such a young age. During which time, I won the State of Florida Stock Market Contest and I also finished in the top 100 in the CNBC stock market contest which had over 1 million participants throughout the country (including some of Wall Street’s elites) with a take home prize of $1 million. These achievements allowed me to be invited to many shows and events with top people in their fields of business from around the world.