Frequently Asked Questions
High Risk FAQs
Welcome to our Frequently Asked Questions page for High Risk Credit Card Processing. As a high-risk merchant, it’s important to understand the ins and outs of payment processing to ensure your business operates smoothly. We’ve put together this comprehensive guide to answer some of the most frequently asked questions about high-risk credit card processing.
What is high-risk credit card processing?
High-risk credit card processing is a payment processing service designed for merchants who operate in industries that are considered high-risk, such as online gambling, adult entertainment, and CBD businesses. Due to a higher risk of chargebacks, fraud, and other financial losses, high-risk merchants are subject to higher processing fees and stricter underwriting guidelines.
What industries are considered high-risk?
The following industries are generally considered high-risk:
- Online gambling and casinos
- Adult entertainment
- Travel and hospitality
- Nutraceuticals and supplements
- CBD and hemp products
- Firearms and ammunition
- Debt collection
- Tech support services
How can I reduce my chargeback rate?
Chargebacks can be reduced by implementing the following strategies:
- Providing excellent customer service
- Clear and concise billing descriptors
- Easy refund and return policies
- Accurate product descriptions and images
- Secure payment processing technology
- Timely order fulfillment and shipping
Why are high-risk merchants subject to higher fees?
High-risk merchants are subject to higher fees due to a higher risk of chargebacks and other financial losses. Chargebacks occur when a customer disputes a transaction and requests a refund from their bank. If a high-risk merchant has a high rate of chargebacks, they are considered a financial liability to payment processors, who pass on this risk through higher processing fees.
What documents do I need to provide for high-risk credit card processing?
High-risk merchants are required to provide additional documentation to be approved for payment processing. This documentation may include:
- Government-issued identification
- Business licenses and permits
- Bank statements
- Tax returns
- Proof of business registration
- Marketing materials
Can I switch payment processors if I’m already considered high-risk?
Yes, high-risk merchants can switch payment processors, but it’s important to do your research and choose a processor with experience in high-risk industries. Be prepared to provide additional documentation and undergo stricter underwriting guidelines.
What is a rolling reserve?
A rolling reserve is a percentage of a merchant’s daily credit card transactions that are held in reserve by the payment processor to cover potential chargebacks or other financial losses. The reserve is held for a period of time, usually 3-6 months, after which it is released to the merchant.
What is underwriting?
Underwriting is the process by which payment processors assess the financial risk of merchants. High-risk merchants are subject to stricter underwriting guidelines to ensure payment processors are protected from potential financial losses.
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What is a high risk merchant account? A high risk merchant account is a type of merchant account designed for businesses that are considered high risk due to factors such as the industry they operate in, a high rate of chargebacks, or a history of bad credit.
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What industries are considered high risk? Industries that are considered high risk include adult entertainment, online gaming, nutraceuticals, travel and tourism, debt collection, and firearms.
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What is the application process for a high risk merchant account? The application process for a high risk merchant account typically involves filling out an online application, providing documentation such as financial statements and business licenses, and undergoing a credit check and underwriting review.
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How long does it take to get approved for a high risk merchant account? The approval process for a high risk merchant account can take anywhere from a few days to a few weeks, depending on the provider and the complexity of the application.
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What fees should I expect to pay for a high risk merchant account? Fees for a high risk merchant account may include application fees, setup fees, transaction fees, and chargeback fees, among others. The specific fees and rates will vary depending on the provider.
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What is a rolling reserve? A rolling reserve is a portion of each transaction that is held by the payment processor for a certain period of time as a form of collateral against chargebacks and other potential losses.
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How much of a rolling reserve should I expect to pay? The amount of a rolling reserve will vary depending on the provider and the perceived risk associated with your business. Some providers may require a rolling reserve of 5-10% of each transaction, while others may require up to 25%.
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What is a chargeback? A chargeback occurs when a customer disputes a charge on their credit card and requests a refund from the merchant. Chargebacks can be costly for merchants, as they can result in fees and the loss of revenue.
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How can I reduce my chargeback rate? Merchants can reduce their chargeback rate by implementing fraud prevention measures, providing excellent customer service, and responding promptly to customer inquiries and concerns.
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What is a high chargeback ratio? A high chargeback ratio occurs when a merchant has a high percentage of chargebacks compared to their total transactions. This can result in the termination of a merchant account.
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Can I get a high risk merchant account with bad credit? Yes, it is possible to get a high risk merchant account with bad credit, but it may be more difficult and result in higher fees and rates.
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How can I improve my chances of getting approved for a high risk merchant account? Merchants can improve their chances of getting approved for a high risk merchant account by providing accurate and complete documentation, having a strong financial history, and demonstrating a commitment to fraud prevention and chargeback mitigation.
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What is a virtual terminal? A virtual terminal is an online portal that allows merchants to process credit card payments from any computer with internet access.
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Can I use a virtual terminal for high risk transactions? Yes, virtual terminals can be used for high risk transactions, but may be subject to higher fees and rates.
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What is a payment gateway? A payment gateway is a software platform that connects a merchant’s website to the payment processor and facilitates the processing of online transactions.
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Can I use my own payment gateway with a high risk merchant account? Some providers may allow merchants to use their own payment gateway, but this will depend on the specific provider and their integration requirements.
At High Risk Payments, we specialize in providing high-risk credit card processing solutions to businesses in a variety of industries.
Our team of experts can help you navigate the complexities of payment processing and reduce your risk of chargebacks and other financial losses.
Contact us today to learn more.
Industries We Serve
Our Process
Submit Your Completed MPA
Send us your completed and signed merchant application along with any necessary supporting documents.
Get Your Approval
Boarding and approvals take 3-5 business days depending on the account and needed documentation.
Integrated Payments
Once approved, we’ll provide you with hardware or payment gateway options for your high risk merchant account.
