You have been told that you need to obtain a high-risk merchant account to provide payment processing for your business. This news may have left you wondering why you were placed in that category and what you can do to get established with a provider.
The high-risk designation.
The reality is that card networks, banks, and payment processors exist to make money. To that end, they prefer to partner with companies that are likely to make their payments on time, have few chargebacks, and be unencumbered by an extraordinary number of regulations. If they consider you to be “high-risk,” they probably think that working with you could put them in financial jeopardy and may reject your application. That’s why you need a high-risk payment processor.
There are several types of high-risk businesses.
- Those that are new.
- Those with a history of credit difficulties.
- Those that operate in a controversial industry or one that is considered unpredictable or unstable.
- Ecommerce companies that accept card-not-present transactions, which make them more vulnerable to security breaches.
Examples of high-risk businesses include sellers of adult entertainment products, cannabis, online gaming, online dating, travel, firearms, and even some subscription-based companies.
What to expect with a high-risk account.
In order to ensure that you’re the right fit, high-risk merchant account providers require a more paperwork-intensive process to apply. Once you are approved, you can expect to pay higher fees and have stricter limits imposed on transactions. They may even require you to set up a rolling reserve account that the bank can tap into should you fail to make a payment.
How to qualify.
In most respects, obtaining a high-risk merchant account involves a process similar to getting a conventional one. You will likely experience the following steps toward qualification.
- Examine your business to learn what factors make you high-risk. Then find a processor with experience and expertise that is compatible with your needs and situation.
- Gather documentation, including tax and financial statements and personal and business credit history.
- Fill out your application thoroughly and honestly. The company will eventually catch you in any omissions or outright lies, potentially causing closure of your account.
- Be sure fees are fair and transparent and that cardholder security is one of the company’s highest priorities.
- Inquire about customer support, and demand that it be prompt and reliable. It should be available through multiple channels, including chat, email, user forums, and direct human assistance.
As you may have noticed, qualifying for a high-risk merchant account isn’t just about the company deeming you worthy. As a legitimate business with products and services you are proud of, you have every right to demand excellence, transparency and scalability from your provider.
Now that you have a better understanding of the nature of high-risk businesses and the payment processors with whom they work, we hope that being placed in this category makes more sense. Once you find the account processor that is best-equipped to understand your industry and unique needs, you can partner with them for optimal payments security and success.