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Cash for card payments - 01 Apr 2010

Q. My acquiring bank for card payments has written to me advising that I must either deposit an £80,000 cash bond or find an alternative acquirer for processing card payments. Is this common practise?

Richard Bradley of Accept Cards replies:

A. We have seen the practice of acquiring banks making this type of request increase significantly in the last 12 months, particularly in sectors where deposits are taken by card payment in advance of the goods or services being provided. From the acquiring banks’ point of view, they see a period of risk between the time when the deposit is taken and the delivery of the goods/service. If the company does not fulfil the delivery then acquiring bank would ultimately have to refund the cardholder itself.  By taking a bond, based on the amount of deposit and delivery period the acquiring bank is effectively covering this risk.

In many cases the request for a bond is a blanket policy in certain market sectors, often without looking at the track record of the individual business. If your business has a sound trading history and positive accounts, there is a good chance that a specialist in the card processing sector can work with you either to achieve a reduction in the bond requested, or to secure a new acquiring bank without the need for a bond.

Richard Bradley is a Director of Accept Cards Ltd, adviser to members of the Forum of Private Business on all aspects of card processing.  

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