setup your forex merchant account

Forex Merchant Account – The Concise Guide
Every day more than US$7.5 trillion are moved in a global marketplace, and to participate you must have a forex merchant account. Businesses and individuals from all over the world buy, sell or trade in a 24-hour platform opened weekdays, and even on most public holidays.

This concise guide to the foreign exchange market will highlight the most important topics that you will need to understand to effectively acquire and operate a trading account. You will discover these points:

• Understand the Forex market
• What are the types of business services that use merchant accounts
• What are the requirements for opening an account
• Why do banks consider forex accounts high-risk
• What are Forex Payment Gateways
• How to find more information on Forex Trading

Guide to Forex Merchant Account Setup
Before getting into the details of the forex merchant account setup process, it’s worthwhile taking a brief tour of the industry. This market known as the FX, or Forex, is an international forum where different countries buy, sell or trade their currencies.

Why do I need a merchant account? The forex market is very extensive and inclusive of more than 170 different currencies. However, none of these currencies have the same purchasing power, and when coupled with another it will change, and this affects how much people will pay for goods or services or travel.

If you plan to sell your goods or services globally you need a forex merchant account to be able to receive multiple currencies. That is if you are a US merchant you can buy goods in Europe and pay in Euro, even though the US uses dollars.

What do you need to set up your Account?
Establishing a merchant account requires some solid proof of stability that will assure the bank that you are a good fit. Banks generally ask for three basic requirements

1. A business license: This will include all documents that support your business including tax receipts.
2. Business volume: This may be credit card history or sales volume.
3. Personal IDs and Utility Bills

Depending on the country it may require more documents. However, these are the general global requirements,

Do’s and Don’ts when Setting Up your Forex Account

• Make sure you choose a high-risk payment processor (See more below)
• Shop for processing rates and fees
• Revise the types of monetary transfers available (Cheques, credit cards, bank wire)
• Be sure to talk directly with the bank

What are the Types of Forex Merchant Account Services
After successfully creating your merchant account, you are now ready to provide forex merchant account services.

There are three types of merchant services:

• International Merchant Account
• Forex Processing Services.
• Forex Payment Gateways

According to the Bank for International Settlements, in April 2022 the daily trade volume of the foreign exchange market averaged 7.5 trillion dollars, a massive increase from the average volumes seen in April 2019, which was 6.6 trillion dollars.

These transactions are managed, supervised, and processed by these three types of service platforms. Here is a summary of the role each sector plays.

International Merchant Account
Since the inception of the Internet, businesses thrived in the hope of eliminating frontiers, allowing them to trade worldwide. In this way, an entrepreneur in Texas can buy products in India, with just the click of a button. Nonetheless, how does the Texan pay for his goods? Someone must facilitate the transfer of funds to the Indian trader. This is the work of an international merchant account service.

Service Provider: Your merchant account gives you the power to offer this type of service to other businesses similar to the Texan and the Indian. They can use your platform to transact payments for their goods or services.

Payment Processing Services
These institutions perform an intermediatory role in processing online payments. The funds are not placed directly into your bank account but are held in a temporal wallet displayed on your profile dashboard.

The merchant is not in control of his funds with payment processors. The transactions are displayed after the fees have been deducted. Once the dire duties are completed, the funds are then made available to the businessman, who may choose to withdraw them to his bank account.

Forex Payment Gateways
As the industry became larger and more traders and businesses became involved in the forex market, the need for a third party dedicated to receiving and paying money, increased. Eventually, forex payment gateways were created.

Payment gateways take the payment process a step further than just charging or paying. The information is shared between the client and the merchant in real time, and the merchant can buy or sell in multiple currencies without the need for information on exchange rates.

The payment gateway is the virtual side of your payment processor. It is secure and connects globally to the forex markets.

Client Benefits: These platforms make it easier for clients and businesses to interact monetarily and in faster periods. The client only needs to verify once and can purchase from all the merchants that are connected to this platform.

Clients receive immediate information on the status of the transaction. Sometimes these platforms serve as both payment processors and payment gateways.

Merchant Benefits: Likewise, the merchant can receive and send funds without the hurdle of verifying clients, tracking wire transfers, or dealing with credit card chargebacks.

Platforms have evolved into multinational and multiple facetual organs with increased security measures that protect both clients and merchants from fraud.

These payment gateways make it easy to accept most payment methods and are installed directly on your website. Some examples are Paypal, Neteller, and Skrill. Most businesses use these merchant account services due to the benefits mentioned below.

Multiple Payment Options: These include credit cards, bank wire transfers, bitcoin, and checks
Lower Risks: Since these services are highly recognized ad use the most standard verification methods, the merchant has almost no risks
Higher Sales Conversion: With automated purchase options, most customers can buy immediately without the need o send additional documents or pass verification procedures
Multiple Currencies: Most wallets offer between 10 -30 different currencies.

You should investigate your forex merchant account payment gateway before adding it to your website.

Forex Merchant Account Structure
Banks may require that you create a forex merchant account structure that is adequate for your business. Some banks, such as Ayden, requires that the business create multiple merchant accounts, separating the point of sale for each legal entity or each major currency.

When establishing the structure of your account, remember that the banks will expect reports and documentation for your monthly transactions and that this will affect how you are paid. Try to keep as few accounts as possible.

Recommended Structures
Based on the Adyen Bank procedures, here is a takeaway summary

• Create one merchant account for each legal business entity that you operate.
• Use separate bank accounts (normal bank accounts under your merchant account) for major currencies ($, EURO, Pound, etc).
• Process reports at the merchant account level.

Is Forex Trading a High-Risk Business?
When you start an investigation to create your merchant account you may be told that forex trading is a high-risk business. You should not take this to be negative, as banks and other institutions have declared this because of the global implications of foreign exchange trading.

There are different factors that affect the forex market daily, even hourly. However, here are some of the stable factors that have led to the high-risk classification of this industry.

1. Little or no Regulation: Traders work from a global market representing hundreds of different countries, making it difficult to establish regulations or even a regulatory body

2. High Claims and Chargebacks: Since there is much fluctuation in the currencies of nations, people tend to repent their investments, and brokers and dealers have to deal with ongoing claims and chargebacks.

3. Money Laundering: The forex market is a perfect avenue for people to launder money, especially since brokers and dealers have no way to justify how their clients acquire their funds. This is now an international crime, and institutions suspected of involvement can be penalized with fines or even lose their licenses.

These are not concrete obstacles, and most banks are willing to take the risk, by placing additional requirements that they believe will reduce the possibilities of the risks listed above. You can find more information on high-risk businesses here.

Is a Forex Account Best for Your Business?
The final decision on whether or not to get a merchant account is yours. Nonetheless, if you plan on entering the largest market in the world, if you wish to expand your services to international clients and accept other currencies, or if you want to make a living trading foreign currency, then you must have a forex merchant account.


One thought on “Forex Merchant Account”
  1. This post helps to get some basic idea about Forex accounts, especially for beginners like me. Is there a separate type of Forex account available for individuals? If yes, then what is the difference between that and a merchant account?

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