Guide to High Risk Merchant Accounts and Credit Card Processing

You know your company classifies as high-risk. But what does that mean to you in terms of owning a high risk merchant account and processing credit card payments?

  1. Risky businesses pay higher in processing rates and suffer extra terms and conditions from card-processing partners.
  2. You may also be subject to a higher rolling reserve fund.
  3. It also points to unstable revenue, low cash reserves, poor credit, unnecessary chargebacks or other sector-wide challenges.
  4. Controlling chargebacks and streamlining interactions with your processor can help control the risk-factors that contribute to a risky classification.

All these can make payment processing difficult and costly. In some cases, the risk profile is too high that finding a partner is a problem.

Cashflow problems, excessive amounts of chargebacks, and expensive fees can impact an enterprise’s bottom line.

High Risk Credit Card Processing

A high risk business can benefit from the ability to take credit and debit payment. Fees often include a percentage rate on every sale, along with a per-transaction charge based on the transaction type.

Chargebacks can make high risk credit card processing more expensive and challenging. Other disadvantages high risk merchant account owners face include

  • Higher rates,
  • Extra fees,
  • Stricter Terms & Conditions.
  • Low processing caps

Why is your Business Risky?

Different service providers and underwriters have their descriptions of a high-risk business or sector.But in essence, they check your credit card processing risk-profile and things like;

  • Excessive chargebacks,
  • Fraud risks,
  • Doubtful services and products or services that must be proved legally;
  • Poor or doubtful personal credit;
  • High ticket sales using credit cards;
  • Selling to consumers with bad credit

Other factors like business type and model, as well as processing history may also lead to a high-risk definition.

Examples of business that fall under this group include those linked to travel, telemarketing, forex, gambling, life-coaching, antiques, adult entertainment, credit-repair services, electronics, gaming, debt-collection services, magazine sales, and so on.

How to Survive If You Are High Risk

The number one priority for a high risk is to control all apparent risks to better their position. It begins by streamlining communication with consumers to deal with, or avoid any payment or transaction problems.

Next, put up capable fraud prevention systems. In general maintaining a chargeback ratio under 1 percent is an excellent way to stay safe.

Number three, you must maintain a lump sum amount of finances in cash. A richer cash reserve may present you as a careful high-risk business owner.

And lastly, develop a chargeback mitigation strategy! Reducing the amount of reverse charges is an excellent way to attract credit card processors.

Final Words

Also, make sure you’re looking in the right place? Sometimes going for the right account provider and card processor can better your conditions even if you’re high-risk.

Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated high risk merchant account provider in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.

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