What is a High Risk Merchant Account?
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 merchant account for high risk business, 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 even for a high risk ACH merchant account.
What Makes a Merchant in Need of 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 high risk merchant account providers are, and those high risk merchant account providers that are willing to process transactions for your high risk business. Due diligence on a high risk merchant account comparison with reputable companies, like PayKings, who are offering solutions to those businesses that need it most with be imperative. These high risk merchant account providers are payment processing companies that 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 merchants who need a successful high risk merchant account application approval and to see if your business might require a high risk merchant account, please click here. Also, if you’re a business owner overseas, consider if you might need high risk offshore merchant processing accounts.
What are the Most Common Reasons a Business might Need High Risk Merchant Accounts?
- The business is selling products online: A high risk eCommerce merchant account is a type of service 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 research a high risk merchant account comparison of companies, take your time with it – as it is important to start off with the right high risk merchant accounts, so that you increase the prolonged longevity of the account. The bank’s underwriting or due-diligence does not end after the account has been opened by high risk merchant account providers. 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.
What is a Chargeback?Chargebacks are also known as credit card charge reversals. A chargeback is an alternative for customers to receive their money back in the case that they find fraudulent transactions on their credit card statements and is particularly common for businesses with high risk merchant accounts.Banks have a special interest (because of their particular commission) in pursuing chargeback claims. So, many dishonest customers misuse this procedure, which causes a growing number of unwarranted chargebacks. The more high risk merchant account chargeback claims you have against you, the more that payment processing providing companies will avoid your business all together.Therefore, it’s no surprise that retailers with high risk merchant accounts are currently going above and beyond to stop chargebacks as much as possible. The demand for businesses to take measures to protect against chargebacks is becoming more and more prominent every year. All retailers with high risk merchant accounts need to learn how chargeback claims can be handled and how to successfully protect their businesses from fraudulent chargebacks.
How do Chargebacks play a role for your High Risk Merchant Account?When it comes to credit card payment processing, you might have difficulty getting approved for a high risk merchant account due to of any number of factors that categorize businesses as high risk such as: fraud, bad credit, or a high ratio of chargebacks.The best high risk merchant account providers will have top-of-the-line security and a proven track record of keeping business and customer information safe and secure, as well as having a system in place to help mitigate a high ratio of chargebacks.Choosing the most reliable high risk merchant account from a reputable high risk payment processor, like PayKings, is critical to your business’s longevity and long-term success. Retailers that are categorized as high risk merchants need to be aware of the hurdles they might face on their journey to securing a payment processing company.PayKings specializes in the risk industry and understands all the ins and outs connected with businesses of this type. PayKings knows how to handle credit card payment processing for virtually any business model and offers options for chargeback protection.
How to Get Approved for a Merchant Account for High Risk Business
Some merchants believe that they can get a high risk merchant account instant approval, but this option just simply doesn’t exist – as the approval process is an involved one. High risk merchants can improve their chances of getting approved by highlighting the best features of their 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, and for the sake of longevity and financial success should keep themselves away from the idea of a telhigh risk merchant account instant approval.
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. Click here for information on international businesses who need offshore high risk merchant account providers and gain insight on how to get approved for a high risk international merchant account.