A Beginner’s Guide:
High Risk Merchants
navigating the world of accepting credit card payments.
Payment processing is an essential part of running a business, but for high-risk merchants, it can be a daunting task. High Risk Payments specializes in providing payment processing solutions for businesses in high-risk industries, making it easier for businesses to find a payment processing solution that meets their unique needs. Here are the benefits and industries that need reliable payment processing:
Navigating the Challenging World of
Accepting Credit Card Payments as a High Risk Merchant
As a High Risk Merchant, accepting credit card payments can be a challenging and costly process.
Whether you operate in an industry that is inherently high-risk or have been labeled as such due to past chargebacks or fraud claims, it’s important to understand the unique challenges and considerations that come with accepting credit card payments.
In this article, we will discuss what it means to be a High Risk Merchant, the factors that contribute to this designation, and the pros and cons of having a High Risk merchant account. We will also provide an overview of popular payment processing platforms and their suitability for High Risk businesses, as well as tips for protecting your merchant account from suspension or termination.
What is a High Risk Merchant Account?
A High Risk Merchant Account is a label given to businesses that are deemed to be at a higher risk of chargebacks, fraud, or returns. This label is assigned by payment processors and banks that work with merchants to facilitate credit card payments.
Businesses can be labeled as High Risk for a variety of reasons, including operating in an industry with a higher likelihood of fraud or chargebacks, having a history of chargebacks or fraudulent activity, or engaging in recurring billing or other high-risk transaction types.
The consequences of being labeled a High Risk Merchant can be significant, including higher processing fees, mandatory reserve accounts, and longer hold times for transaction settlements.
However, it’s important to note that not all High Risk Merchants are inherently “bad” businesses. Many businesses that operate in High Risk industries are profitable and legitimate, but may simply be subject to higher risks due to the nature of their industry.
Factors That Contribute to Being Labeled a High Risk Merchant
There are several factors that payment processors consider when assessing the risk level of a merchant account.
These factors can include:
- Industry: Certain industries, such as online gambling, adult entertainment, and pharmaceuticals, are considered inherently high-risk due to their susceptibility to fraud and chargebacks. If your business operates in one of these industries, you may be labeled as High Risk regardless of your individual processing history.
- Financials: Payment processors may assess your financials to determine your creditworthiness and ability to handle potential chargebacks or losses. Factors such as your debt-to-equity ratio, profitability, and overall financial stability may be considered.
- Billing model: The type of transactions your business processes can also impact your risk level. For example, recurring billing or subscriptions are generally considered higher-risk transaction types due to their potential for chargebacks and fraud.
- Processing volume: The number of transactions processed by your business can also impact your risk level. Higher transaction volumes generally equate to higher risks for payment processors.
Pros and Cons of Having a High Risk Merchant Account
While being labeled a High Risk Merchant can come with some significant disadvantages, such as higher processing fees and mandatory reserve accounts, there are also some potential benefits to having a High Risk merchant account.
These benefits can include:
- Increased profits: If your business operates in a High Risk industry, accepting credit card payments can be a significant revenue stream.
- Higher chargeback protection: Payment processors may offer additional chargeback protection to High Risk Merchants to help mitigate the risk of chargebacks and losses.
- Processing of credit card transactions even with bad credit: High Risk Merchants may still be able to accept credit card payments even with poor credit, whereas traditional merchant accounts may require a higher credit score.
- Long-term growth opportunities: High Risk Merchants that maintain a strong processing history may be able to move into lower-risk processing categories over general guidance on factors that high risk merchants should consider when choosing a payment processor.
When choosing a payment processor as a high risk merchant, you will want to consider the following factors:
- Experience with high risk merchants: You will want to work with a payment processor that has experience working with high risk merchants in your industry. This will ensure that they understand the unique risks associated with your business and can provide appropriate solutions.
- Chargeback and fraud prevention tools: High risk merchants are more susceptible to chargebacks and fraudulent activity, so it is important to choose a payment processor that provides effective chargeback and fraud prevention tools. This can help minimize losses and protect your business.
- Customized solutions: High risk merchants have unique needs, and a one-size-fits-all approach may not be suitable for your business. Look for a payment processor that can provide customized solutions tailored to your business needs.
- Competitive pricing: High risk merchants typically pay higher processing fees than low-risk merchants. However, you will want to compare fees and pricing structures among different payment processors to ensure that you are getting competitive rates.
- Strong customer support: As a high risk merchant, you may face unexpected challenges and issues with your payment processing. Look for a payment processor that provides strong customer support to help you resolve any issues quickly and efficiently.
Overall, choosing the right payment processor as a high risk merchant requires careful consideration of your business needs, risks, and goals.
By choosing a payment processor that can provide customized solutions, effective chargeback and fraud prevention tools, and strong customer support, you can protect your business and minimize risk while maximizing profits.
As a payment processing advisor for High Risk merchants, we help our clients find an ideal High Risk payment processor by following a comprehensive process that involves the following steps:
- Assessment: We first conduct an assessment of the merchant’s business, industry, payment processing history, and financials. This assessment helps us understand the level of risk associated with the merchant’s business and the specific needs and requirements of the business.
- Research: Based on the assessment, we research and identify payment processors that specialize in High Risk merchant accounts and have experience working with businesses in the merchant’s industry.
- Comparison: We compare the fees, features, and services of multiple payment processors to identify the one that offers the best value and meets the specific needs and requirements of the merchant’s business.
- Negotiation: We negotiate with the payment processor to obtain the most favorable rates and terms for our clients.
- Integration: We assist our clients with the integration of the payment processor into their existing e-commerce platform and provide ongoing support to ensure smooth and efficient payment processing.
- Monitoring: We monitor the merchant’s payment processing activity to ensure compliance with the payment processor’s terms and conditions and proactively address any issues that may arise.
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.
