High Risk Merchant Accounts and Payment Gateway SolutionsThe PayKings team has high risk merchant accounts for businesses with payment processing volumes of $20,000-$100,000,000+ per month. Our gateway services give you access to information regarding your high risk merchant account, including individual transactions and batch totals with comprehensive reporting tools. Merchant Payments Acceptance Corp’s end-to-end solution offers flexible products and high risk merchant account services that enable merchants to accept nearly all types of electronic payments including major credit cards: MasterCard®, VISA®, American Express®, Discover®, Diners Club International®, signature debit cards Gift and loyalty cards, and ACH.
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What is a High Risk Merchant Account?
How do you know if your business has been categorized as a high risk merchant and why is it important to make sure you have the right high risk merchant account for your business? Not understanding the difference or the importance could have a detrimental impact on your business.
Businesses that are considered high risk have to know who the right processors are, and those high risk merchant account providers that are willing to process transactions for your high risk business. Reputable companies, like PayKings, are offering solutions to those businesses that need it most. These payment processors are willing to accept the liability for the increased risk associated with those categorized as high risk businesses.
Surprisingly, most merchants who do fall into this class are unaware of it. For a complete list of high risk merchants and to see if your business might require a high risk merchant account, please click here.
What are the Most Common Reasons a Business might Need High Risk Merchant Accounts?
- The business is selling products online: This type of service is commonly referred to as Card-Not-Present merchants.
- The business is in a highly regulated industry: Such businesses involved with selling tobacco or e-cigs, firearms, and alcohol are among a few of the many that would fall in this category.
- The business is in an industry that a bank may see as a reputational risk: Companies that deal with information technology that might risk stolen customer information could be considered a reputational risk, as are those in any adult industry.
- The business industry is known for having a high instance of chargebacks or fraud: Merchant accounts that fall in this arena often experience increased chargebacks, identity theft, account takeover, and more; convincing banks to run in the other direction.
- The business sells products or services on a continuity or recurring billing model: This type of business model brings a lot of chargebacks when clients are billed without consent or remembering they even signed up; too many chargebacks will lead to your account shutting down entirely.
- The person signing on the merchant account has bad credit: This one is a no-brainer. Banks are less willing to lend funds to those with bad credit which is when a high-risk processing company comes in handy.
Why is it Important to Have the “Right” Payment Processor for your High Risk Merchant Account?
The main reason to make sure you have a merchant account for high risk business when you start is to avoid the chances of your merchant account being shut down. The bank can close your account and hold funds, even without notice. This means you have no way of selling your products or services, it stops all cash flow entirely, and the money from the products or services you sold could be held by the banks for months.
When you start off with the right high risk merchant accounts, you increase the prolonged longevity of the account. The bank’s underwriting or due-diligence does not end after the account has been opened. There is ongoing risk monitoring that is associated with all high risk merchant accounts. So if an account has been opened under false pretenses or the business model is deemed high risk after the fact, expect the account to be closed. Alternatively, starting out with the right high risk merchant accounts betters the odds that the acquiring banks will be more lenient.
The label of high risk merchant isn’t taboo. Factors such as your industry, location, and even the clientele can categorize your business and apply that high risk merchant account label. However, this shouldn’t send you into a panic, just because you may be more difficult to finance, doesn’t mean you can’t get the payment processing your business needs. Many times the approval process can be quick and many companies like PayKings provide free quotes.
How to Get Approved for a Merchant Account for High Risk Business
High risk merchants can improve their chances of getting approved by highlighting the best features of the business. A cover letter should include relevant information, such as the industry insight of people involved in the project. Merchants should also discuss anything that makes the business stand out, such as proactive fraud monitoring.
Address high trading volumes in a cover letter. Trading volumes impact the risk to the processing company. Showing a strong processing history with a great deal of money moving through the business can increase the chance of approval.
Finally, high risk merchant accounts should have a plan to address long fulfillment duration. Fulfillment duration refers to the amount of time it takes between when payment is collected and when the service or product is delivered. The longer the fulfillment duration, the higher the risk of chargebacks, and thus the riskier the business. Reducing the fulfillment duration or showing strong reserves makes the merchant a lower risk.