HSBC Merchant Services Seeking Guarantee

Discussion in 'Ecommerce Forum' started by lookalike, Sep 8, 2010.

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  1. lookalike

    lookalike UKBF Newcomer Free Member

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    Has anyone previous experience with HSBC merchant services seeking a guarantee on the possible risk of charge backs if the business closed.

    We had a busy period two week sales period about a month ago and they are now using this two week period as a peak months turnover figure and are looking for a guarantee from our bank for a sizable sum as the accounts don't show a balance to cover this in the balance sheet.

    They are proposing setting aside a large cash deposit as security.


    They said they will terminate the merchant services agreement if we don't comply so that would leave us stuck as we sell everything through our website.

    Has anyone ever experienced similar and worked out a solution?
     
    Posted: Sep 8, 2010 By: lookalike Member since: Sep 8, 2010
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  2. akirk

    akirk UKBF Newcomer Free Member

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    sounds quite usual...
    some merchant services hold on to your money for longer to avoid charge backs, others seem to insist on a deposit as security...

    talk to them about your normal turnover and offer a smaller period amount (e.g. one week) - perhaps agree a one week rolling security so that if you have a peak you increase your security for that time...

    or look for another supplier...

    Alasdair
     
    Posted: Sep 8, 2010 By: akirk Member since: Jul 1, 2010
    #2
  3. consultant

    consultant Your Business Community Staff Member

    5,669 798
    Call their bluff!

    Open up a merchant account with another provider (which can choose not to use) and say no to HSBC. If they stop merchant services, you have a minor inconvinience in swapping things.

    You may also get better terms!
     
    Posted: Sep 8, 2010 By: consultant Member since: Jan 21, 2008
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  4. lookalike

    lookalike UKBF Newcomer Free Member

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    I have already started that process and hope to get both a better rate and no personal guarantee. Basically they are looking for a personal guarantee of nearly £50K. Which is approx a third of our sales. We had a particular clearance sale that really went well for the two weeks and this has now caused these difficulties.
     
    Posted: Sep 8, 2010 By: lookalike Member since: Sep 8, 2010
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  5. InternetPaymentProvider

    InternetPaymentProvider UKBF Newcomer Free Member

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    Hi

    Some processors will take a Rolling Reserve rather than a Cash Deposit, which maybe something to suggest. Lisa
     
    Posted: Sep 8, 2010 By: InternetPaymentProvider Member since: Aug 11, 2010
    #5
  6. Mustaka

    Mustaka UKBF Newcomer Free Member

    332 161
    I would suggest that you expidite getting another "backup" merchant account. I have run into this in the past with HSBC and lost a merchant account.

    Our problem was different though in that our sales were increasing rapidly but the funds available in our account remained about the same. We were basically pumping any profits straight back into the business to grow it faster. The Merchant account manager not being an entrepenuer did not see the sense in this and closed the account with a couple of weeks notice.

    We had by this time secured better rates with another provider.

    My advise is when you apply for another account do not mention the cash reserve request to the new provider. Simply say your hunting to improve your rates.

    I would also suggest you have your managment accounts up to date.
     
    Posted: Sep 8, 2010 By: Mustaka Member since: Feb 3, 2009
    #6
  7. bedlinen direct

    bedlinen direct UKBF Newcomer Free Member

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    We have been with them for 4 years, no isses and only 3 charge backs in all this time intil two weeks ago and we had two back to back. One of our customers went to town and kept emailing someone at thier call centre and we then had to have a review with a Risk Analyst. Well, I was only told this once the call was over and he demanded 6K to cover us for this type of transaction, I refused and they sent a closure letter. No customer service or loyalty, been banking with HSBC since 2005 and they is what they call looking out for thier customers interest. We have now gone elsewhere and we will be closing all out ties with them very soon.
     
    Posted: Nov 3, 2012 By: bedlinen direct Member since: Jun 21, 2012
    #7
  8. BenKirkwood

    BenKirkwood UKBF Regular Full Member

    294 48
    Just another prime example of banks driving small businesses away - you'd think customer retention was important but HSBC and others are continuously making it more difficult for SME's to trade at all! nuts! Seek an independent MSP, save money and get better service.

    Ben
     
    Posted: Nov 5, 2012 By: BenKirkwood Member since: Aug 4, 2010
    #8
  9. BenKirkwood

    BenKirkwood UKBF Regular Full Member

    294 48
    Just another prime example of banks driving small businesses away - you'd think customer retention was important but HSBC and others are continuously making it more difficult for SME's to trade at all! nuts! Seek an independent MSP, save money and get better service.

    Ben
     
    Posted: Nov 5, 2012 By: BenKirkwood Member since: Aug 4, 2010
    #9
  10. MetroCoffee

    MetroCoffee UKBF Newcomer Free Member

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    They aren't part of HSBC, they just use the name
     
    Posted: Nov 6, 2012 By: MetroCoffee Member since: Nov 6, 2012
    #10
  11. tccraig

    tccraig UKBF Newcomer Free Member

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    I have been through hell and bank with Merchant accounts you need to have at least 3 accounts at all times, they will not only block funds on you but they will also put you on a deferral in my instants this was 85k plus 45 days deferral meaning all funds taken on on 1st Jan lets say 2k they would pay this amount to us on 15th Feb all funds taken on 2nd Jan would pay on 16th Feb. The merchants sunk the business due to cashflow issues we had. I am very bitter and twisted as regards to merchant accounts as you do not get any warning they simply block the funds state that your account is being re assessed and no funds will be released until this is done.
     
    Posted: Nov 6, 2012 By: tccraig Member since: Nov 5, 2012
    #11
  12. tccraig

    tccraig UKBF Newcomer Free Member

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    As regards to chargebacks in our case we had 3 chargebacks that were defended in 12 months. The issue was that the banks decided to re grade our industry to super high risk that is when we had this nightmare. They can re grade any industry as and when so make sure you have plenty of merchant accounts the more the better also have atleast 2 or 3 payment processing companies integrated into your website. Constantly turn them on and off managing the amounts you put through each merchant account, if they see any large spikes you have had it so you have to be on top of this at all times.
     
    Posted: Nov 6, 2012 By: tccraig Member since: Nov 5, 2012
    #12
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