High Risk Merchant Blog
High-Risk Merchant Account Applications: What to Expect and How to Prepare
As the world moves towards digital payments, an increasing number of businesses are seeking cost-effective payment processing solutions. However, certain businesses are considered high-risk due to their industry, business model, or other factors that increase the likelihood of fraud or chargebacks. If your business falls into the high-risk category, you may struggle to find the right payment processor. In this article, we'll guide you through what to expect and how to prepare for a high-risk merchant account application.
What Makes a Business High-Risk?
Businesses from certain industries, such as CBD, e-cigarettes, and adult products, are automatically flagged as high-risk. Additionally, factors like poor credit records, new businesses, and high chargeback ratios can also contribute to a business being labeled as high-risk. more at High Risk Merchant Blog
How Do High-Risk Accounts Differ from Regular Accounts?
High-risk merchant accounts differ from regular accounts in several ways, including:
* Longer application process: High-risk businesses may require more detailed information and a more thorough review process.
* Higher payment processing fees: High-risk businesses may be charged higher fees to offset the increased risk.
* Cash reserve requirements: Processors may hold a portion of transactions to mitigate risk.
* Higher chargeback fees: Businesses with high chargeback ratios may be charged higher fees.
* Volume caps in credit card processing: Processors may limit the volume of transactions to reduce risk.
What to Do If You're a High-Risk Business and Need a Payment Processor
If you're a high-risk business, here are some steps you can take:
* Maintain healthy cash levels to demonstrate financial stability.
* Reduce chargebacks by ensuring accurate product descriptions and timely delivery.
* Be transparent during the application process and provide detailed information.
* Keep your financial documents ready, including bank statements and tax returns.
* Follow the guidelines set by your payment processor.
How to Find a High-Risk Merchant Services Provider
To find a suitable payment processor, research providers that cater to your industry and consider factors like:
* Experience working with businesses in your industry
* Processing fees and rates
* Equipment provided, such as POS machines and virtual terminals
* Customer support and response times
* Support for diverse payment methods, including credit cards, eChecks, and ACH payments
By understanding what makes a business high-risk and preparing for the application process, you can increase your chances of finding a suitable payment processor. Remember to research providers that cater to your industry and consider factors beyond just processing fees. With the right preparation and research, you can find a payment processor that meets your business needs.
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