Risky high-yield merchants are often entrepreneurial, traditional small to mid-level businesses, and the occasional big-box shop, but they all have something in common. They were unlucky enough to trigger the accounts offered by a suite of High-Risk Merchant Services.
If this sounds like you, our guide will help you navigate High-Risk Merchant Accounts and find the best one for your needs!
High-Risk Merchant Account: What is It? What Causes a High-Risk Classification?
A high-risk merchant account is a type of account typically used by businesses that are considered high risk. This can be due to many reasons,e.g., the type of business, its location, or credit history.
The most common factor is the type of business. Some businesses, such as casinos and online gaming, are considered high risk because there is a higher chance that customers will not pay their bills. Other businesses, such as online pharmacies, are considered high risk because they may sell products considered illegal in some countries.
The location of the business can also be a factor in determining whether or not it is considered high risk. Businesses located in countries with unstable governments or high levels of crime are often considered high risk. This is because there is a greater chance that the business will not be able to collect on its debts if the country experiences political or economic turmoil.
Finally, the credit history of the business can also be a factor in determining whether or not it is considered high risk.
High-Risk Merchant Account Concerns to Prepare for
If you’re a high-risk merchant, there are a few things you should keep in mind when applying for a merchant account. Here are some of the key concerns to prepare for:
1. Higher fees
As a high-risk merchant, you can expect to pay higher fees than average when it comes to credit card processing. This is because your business has a higher risk of chargebacks and fraud. Make sure you understand the fee structure before signing up for an account.
2. More stringent underwriting
High-risk merchants often go through a more stringent underwriting process than average. This means providing more documentation about your business, such as business licenses and tax returns. Be prepared to answer questions about your business history and operations.
3. Increased scrutiny from banks
Banks that work with high-risk merchants often have increased scrutiny from regulators. This means they may require more documentation and information about your business. Be prepared to provide detailed information about your business if you’re asked.
4. Limited options
Fewer banks and financial institutions are willing to work with high-risk merchants. This means you may have limited options when choosing a merchant account provider.
Choosing the Right Processor for Your Needs
Here are a few things to consider when choosing a processor for your high-risk merchant account:
1. Pricing
Make sure you understand the pricing structure of the processor you’re considering. Some processors charge higher fees for high-risk businesses, so it’s important to know what you’re being charged.
2. Risk Management
A good processor will have experience in managing high-risk merchant accounts. They should have systems and processes to minimize the risk of fraud and chargebacks.
3. Customer Service
When running a high-risk business, it’s crucial to have access to quality customer service. You should be able to reach customer service easily, and they should be able to help you with any issues you have.
4. Reputation
Finally, take some time to research the reputation of the processor you want to work with. Read customer reviews to find out what other merchants say about the service. That way, you can make a more informed decision on whom to work with.
Last Words on High-risk Merchant Accounts
If you’re a high-risk merchant, chances are you’ve had difficulty finding a traditional merchant account. Banks and other financial institutions often view high-risk businesses as too great a risk. However, some processors specialize in high-risk merchant accounts, so you’re sure to find one that fits your needs.
Summary
High-risk merchant accounts are more difficult to acquire than standard merchant accounts. But you can still acquire one if you know what to do.
