Why it’s important to have more than one payment processor account…

November 23rd, 2009 | Posted in alertpay, global digital pay, Liberty Reserve, payment processor, strictpay

Back in the days when online investing was in its infancy newcomers found it difficult to understand just how you transferred funds from your bank account to a new investment programme. Normal methods weren’t feasible and e-currencies were a new concept that many found confusing.

As time has gone by knowledge and experience have made things clearer and now the majority of people are comfortable in using what are now more commonly known as online payment processors. These organisations act as an intermediary financial payment system helping you to deposit and withdraw funds.

As payment processors are virtual organisations opportunities were created for the less honest to profit by embezzling funds from their members. Even if criminal activities were not necessarily involved regulatory problems meant that some processors just couldn’t survive.

So, online investors not only have to deal with programmes that fail but they also have to be wary of the payment processors they use. Whilst things have progressed in the last few years and there is more transparency you will often see reports regarding payment processors and the problems they have to deal with.

Currently one of the most popular processors, Solid Trust Pay, has been subjected to a series of problem reports and it is not clear whether this is just an operational problem or whether there are more serious issues to resolve.

This example emphasises the need to open accounts with a number of payment processors as this will provide some mitigation if problems arise. However, it should not be forgotten that some programmes will only allow you to withdraw funds to the processor that you made the deposit with. If this is the case then you still have a potential problem. In an effort to address this problem some programmes are offering the ability to transfer funds internally from one processor to another. Assuming this doesn’t contravene any regulations then this option, if available, may be worth considering when selecting an investment.

There is little chance that the need for payment processors will ever disappear so it is important that you set things up correctly in the first instance and open a number of accounts that will provide a good degree of flexibility.

I have accounts with AlertPay, StrictPay, Liberty Reserve and Global Digitial Pay. So far I’ve not had any real problems with any of these companies and they do represent payment processors that are accepted by virtually all online programmes.