In this day and age, most businesses need a platform to process cashless and online transactions to survive and keep up with the fast-paced age of technology. This is also a great way to enhance your online presence and total sales volumes. To process such transactions, a business must possess a merchant account. Most businesses opt for opening a traditional merchant account with a trusted financial service provider. However, there are those businesses who may have suffered some unfortunate financial setbacks, and they no longer qualify for a typical or ordinary merchant account. Such businesses often have to consider opening a high risk merchant account. This article takes an in-depth look into the reasons that a business might have to open a high risk account, as well as the pros and cons associated with such an account.
Why Businesses are considered High Risk in the First Place?
• New businesses that do not possess a significant reputation yet, can be considered high risk. The same can be said for experienced businesses that have a bad credit score due to past decisions which resulted in huge financial losses; as well as approved applications for low risk merchant accounts that were terminated for any number of reasons. These businesses might have defaulted on a past loan or due to clients not fulfilling their financial commitments, they have gone into large amounts of debt.
• Businesses that often handle many international imports and exports can also be labelled as high risk, as the rules and regulations regarding transactions across borders are often finicky and fraught with red tape, meaning that financial service providers hesitate in dealing with them.
• Other high risk businesses are those which are high risk simply due to the nature of the market in which they specialize in. Such businesses include interest reduction companies or online medical dispensaries, where the risk of legal disputes is high.
• Businesses with transactions that exceed $1000 are also high risk, since the hefty price tag usually comes with scrutiny on the product being sold
This does not necessarily mean that the business is involved in any illegal activities but simply that the nature of the business in which the company deals with has a greater chance of not being viable financially or has a higher chance of legal issues.
Why is it Necessary to obtain a High Risk Merchant Account?
Such businesses no longer have the luxury to obtain a regular merchant account but as stated before, in order to remain viable in this day and age, it is essential to be able to process all forms of cashless transactions. That’s where high risk accounts come in. They offer businesses a chance to regroup and become profitable again by availing to them funds and services that traditional merchant account providers will no longer provide to them.
How to register for a High Merchant Account
A typical merchant account with a traditional merchant services provider can take up to weeks to process. This is due to their in depth vetting process and the many conditions that businesses have to adhere to. High risk accounts have become a more attractive option since there is now a multitude of quick and easy options when applying for an account. The vetting process is also simplified, with most of the procedure occurring online. Businesses can gain approval within a record 24 hours and immediately start accepting cashless transactions.
Apart from offering a platform to process transactions, high risk merchant account providers also deliver essential support to their valued clients. Their well trained professional customer care employees are available on a 24 hour basis to assist with any query or problem your business might face. The platforms on which these high risk merchants operate are also well protected from would be fraudsters and any form of cyber threat via state-of-the-art technology and software. Such criminals often use bounced checks or invalid credit cards.
High risk merchant accounts also offer support and advice on how businesses can reduce the risk of incurring chargebacks of any sort. Chargebacks are disputes that occur between the customer and the merchant. This happens when a client queries a deducted amount that has already been transferred from their account. The subsequent amount is then withdrawn back by the client, resulting in a shortfall for the merchant account holder. Usually the merchant account provider will insist on a reserve of cash intended for use only when the amount filed in a chargeback is too great for the merchant to pay from their regular account; thus, the reserve cash would have to be utilized to solve the dispute. The amount that has to be in this reserve account averages around 5 to 10 percent of the monthly sales.
Since there are a great deal of financial service providers willing to capitalize on your business’ high risk status in order to maximize their profits, it is of utmost importance to carry out the necessary research into every possible financial service provider you might choose to work with.
Always ensure that whatever solutions are offered, they must allow full control over the way in which your business operates, including how transactions are processed and the way your company’s brand is transmitted to the financial market.
Becoming a trustworthy and reputable online brand is of the utmost importance to any business who wishes to remain viable in the 21st century. It’s an extremely difficult task for those companies who have been tagged as high risk to find financial service providers who are willing to be liable for the risk associated with your business. Therefore, high risk merchant account providers are the only secure option left to such companies. The services offered in high risk accounts are often far more pricey but also advantageous as when compared to their low risk counterparts. They allow businesses which might have struggled financially in the past, to gain a new lease on life.

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