Telemarketing Merchant Account Basics
Selling by phone puts you in a watched risk group. Here is what banks see, what the rules require, and how to apply honestly.
A telemarketing merchant account is a card account for a business that sells by phone. It lets you take card payments from customers you never meet. Know why before you apply.
What a telemarketing merchant account is
It is a standard card processing account, but the bank knows your sales happen by phone. The customer is not standing in front of you with a card.
Why phone sales carry a higher risk profile
FinCEN's advisory says payment processors serving telemarketing and Internet merchants may present a higher risk profile to a financial institution than other businesses. To see how banks oversee processors, read the page below. Read why banks watch payment processors.
The payment facilitator restriction on outbound telemarketers
Visa's guide says payment facilitators are prohibited from providing payment services to outbound telemarketers, other payment facilitators, and marketplaces. That rule is Visa's. It applies to Visa's payment facilitator program. So under Visa's rule, a payment facilitator cannot serve you if you call out to sell.
Express verifiable authorization before billing
The FTC Telemarketing Sales Rule says billing requires the customer's or donor's express verifiable authorization. The rule says you cannot bill without that proof. Charging without it counts as a deceptive act. In plain terms, you need proof the customer agreed before you bill. Read more on billing authorization for phone sales.
Upsells count as separate transactions
The FTC Telemarketing Sales Rule says an upsell is a separate telemarketing transaction, not a continuation of the first one. So treat each upsell as its own sale.
The rule splits upsells two ways. An internal upsell is made by or for the same seller as in the first transaction. An external upsell comes from a different seller than the first sale.
Helping a rule-breaking telemarketer is itself a violation
The FTC rule says providing substantial assistance to a seller or telemarketer known to be violating the rule is itself a violation. Make sure your own script follows the rule.
Applying honestly: describe the real business
Describe the business you run. Say you sell by phone. Do not dress it up as something else to look safer. The FTC rule also reaches anyone who helps a known rule breaker. Your phone script, your product, and your refund terms should all match what you put in the application.