You are passionate about helping your customers foster their interpersonal relationships. In other words, you are an entrepreneur who runs a dating service. What could possibly be the downside of matching compatible people with each other? When you went into this business, you probably never guessed that you would be placed in the “high-risk” category by every payments partner you applied for a merchant account with. Just what makes you such a dangerous risk? Is there anything you can do to reduce the cost of your high-risk merchant services?

High-risk businesses defined.

Of course, it makes sense that merchant account providers do not want to get involved with companies that might have a lower likelihood of paying their bills on time. It is a no-brainer that these companies often check people’s personal and business credit scores before agreeing to take them on as customers. Moreover, they generally place risky clients into a different category in which you are charged higher fees.

There are several reasons for a merchant to be deemed high-risk by a processor. Some companies sell products such as pharmaceuticals, cryptocurrency, adult entertainment materials, e-cigarettes, vaping products and suspected drug paraphernalia that, while not technically illegal in most cases, is perceived as walking that fine line between legitimate and contraband.

In other cases, a merchant may be classified as high-risk due to their individual business history or practices. These include:

• Excessive chargebacks.

• Losing a previous merchant account/being considered a terminated merchant;

• Being a new business with little or no credit history. 

• Selling “big ticket” items.

• Offering subscription-based services.

• Doing business internationally, particularly if you sell to certain countries with high chargeback averages.

• Having less-than-stellar credit. 

While you have little or no control over some of items on the aforementioned list, many business owners are able to successfully reduce chargebacks with a combination of patience, diligence, and good business practices.

Why are dating services considered high-risk?

You might be wondering what makes lenders so squeamish about your business type, which provides legal service to adults, and may not have any international customers at all. There are two factors. First, dating services experience a higher-than-normal number of chargebacks because of the random nature of the industry. Think about it: customers give you their money in hopes that they will find love with one of the other clients on your service. If things don’t work out, and they fail to find a companion, many tend to blame the dating service and immediately dispute their credit card charge through their issuer. 

During the period of time when the case is being investigated, the customer is refunded their payment. If they ultimately lose, they will be required to repay it, but that doesn’t help you very much. Because, even if you are ultimately victorious, you will still be charged a fee by your merchant account provider. What’s more, the chargeback will show up on your record whether you win or lose. Too many experiences like this can be very costly and might even lead to account termination. To avoid this potential disaster, providers simply place you in the high-risk merchant services category from the start.

Some of your dating service clients may also possess other undesirable characteristics or engage in behaviors that reflect badly on your business. For instance, a partner may discover their spouse is using your site, leading to chargebacks and other forms of duplicity. Other customers may join your service for the express purpose of committing fraud against you or other users. These activities can not only cost you money but can also damage your reputation in an industry where credibility is key.

Potential solutions. 

The truth is the nature of the online dating business makes it nearly impossible to receive standard merchant services and the lower fees associated with them. However, that does not mean you are powerless. Take the following actions to ensure you have as many viable options as possible:

• Be honest. There is nothing to gain from failing to fully disclose the nature of your business. 

• Renegotiate. In the beginning, the fees and terms you pay may be high, especially if you are a new business owner without an extensive credit history. If things go well for your enterprise, you can renegotiate in a year or so, presenting evidence of your positive payment and credit history.

• Minimize chargebacks. While you can never eliminate them totally, there are steps you can take to keep forced customer refund numbers low. Be sure that your refund policy is clear and prominently displayed. Then, encourage customers to contact you directly with concerns instead of going to their credit card provider. Reduce fraud by verifying customer addresses and asking for the credit card CVV number.

• Enroll in a chargeback system. It will give you three days to give a full refund to customers before chargebacks show up on your record.

• Maintain good relationships with your customers, immediately addressing their concerns and sending them friendly emails after purchases to make sure they are happy.

• Shop around until you find the right processor. Even though your business is considered high-risk, you deserve top-level customer service and payment options just like every other merchant. Check to be certain that the company you choose is PCI-compliant (complies with payment card industry data security standards) and does not charge early cancelation fees or lock you into long-term commitments.

Just because you’re operating a dating business, doesn’t mean you have to accept the services of a third-rate payments provider who doesn’t have your best interests in mind. Do your homework, accept only the best, and you and your high-risk provider might just turn out to be a match made in heaven.

To find your perfect payment processing match for online dating services, contact Humboldt Merchant Services at 877.387.5642 or online.

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