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Bytestart reader hit by bank risk assessment charges

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We received an email from the director of a small company who feels he has been penalised with higher bank risk charges for cardholder not present transactions, when many much larger companies are treated very differently by the major high street banks. The email is included below (with names omitted).

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Email Below:

"We are small highly specialised concern. We supply retailer gift vouchers for resale and as part of membership driven discount shopping schemes. We have had merchant services facilities with a high street bank for just over four years.

Just over 18 months ago our turnover jumped five-fold to well in excess of £1m. Most of this turnover comes from card holder not present transactions. As a result the bank had us risk assessed and subsequently asked us for financial guarantees.

We understand that because the gift vouchers we supply have no redemption date on them then the bank feels that it has an exposure should a retailer fail before the vouchers are redeemed.

We are somewhat bemused by this concern as the retailers we deal with include some of the UK's largest retailers.

Some of the retailers we deal with are also customers of the same bank which adds to our concern.

To add insult to injury the bank now wants us to pick up any legal costs they incur in setting up guarantees in addition to their internal charges.

We are not aware that anybody involved in this sector has been subject to a similar requirement. It would therefore be of great interest to hear if any of your subscribers have suffered a similar experience and if so how they resolved it."

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If anyone else has had a similar experience and would like to comment, please email us.

Posted May 24, 2005