Have you ever been turned down by multiple credit processors? If the answer is yes, then you may have a high risk business. These are businesses that are prone to fraud. Many businesses may be considered high risk because of their industry. For example, IT companies are prone to data breach and theft. Online retailers are also frequently targeted by hackers. Your businesses susceptibility to phishing may deny you the ability to have a merchant account.
The most successful businesses always take advantage of the best credit card processing methods. As a flexible mode of making transactions, merchant accounts make it easy for the business to accept debit and credit cards as a flexible form of payment.
Even so, a number of businesses are denied the chance of opening a merchant account. Granted, there are other online pay services, however, these accounts are known to be affordable as they come with lower percentage rates.
What is a Merchant Account?
A merchant account is a special kind of bank account that holds funds that are captured from credit and debit cards. This account acts as a legal agreement of sorts between the business and the payment processor.
If your business has an e-commerce transaction service, then it will be easy to authorize business transactions.
Credit cards processors are not under the obligation to accept you as a customer. This is because they are liable for any risk that your business poses. It is safe to say that your industry may work against you; as far as payment processors are concerned.
A few businesses that may experience challenges when opening merchant accounts include:
•Debt collection and consolidation
•Gambling enterprises
•Talent and marketing companies
•SEO service companies
•Financial consultants and advisors
•Insurance sellers
•Investment strategy companies
The Underlying Factors
High risk businesses have the following common factors:
•Perceived reputation
Many payment processors easily discriminate against these types of businesses. Companies that bear a negative reputation have a difficult time securing a merchant account.
• Chargebacks
Chargebacks are known as customer protection mechanisms. When a customer files a complaint that has a previously approved transaction reversed, payment processors may regard your business as an unsure proposition.
• Legal issues
Your company may be walking a fine line between valid and illegal business models. If your business is outlawed in certain jurisdictions, a payment processor may not want to be associated with you.
Choosing a Payment Processor for Your High Risk Merchant Account
There are many payment processors who work on behalf of high risk merchants, however; not all of them will work well for your business.
When evaluating your options, consider the following factors when choosing a payment processor:
• Discount rate factors
It is important to choose a processor that will accommodate your business model. Processors offering interchange plus pricing models charge a merchant service commission on top of the interchange cost. This is a more transparent merchant account pricing model. Other pricing models like tiered pricing are much more difficult to understand and evaluate.
• Online payment gateways
For modern businesses, being able to accept online payments is very important. Different high risk accounts come with different payment gateways and integrations. A good payment processor should be able to assist your company with integration and setup of the payment gateway.
• Transaction fees
If your business makes many small transactions, then it is only logical to settle for payment processors with the lowest transaction fees.
• Contract flexibility
If you prefer a month to month contract, then it is important to find a merchant account provider that offers this. Avoid those who want to sign up for longer periods of time and even associate the account with early cancellation fees.
• The right physical equipment
The best payment processors are able to accommodate all your payment needs. They should accept chip cards, easily process digital wallet payments and keep your POS terminal updated with the latest software.
• Realistic promises
Your prospective processor should be honest about the approval process. They should not make blanket promises such as, “we approve any type of account,” instead, they should make sure you understand the process and the complexities of a high risk merchant account.
The Secret Weapon
A magic handshake will not get you through the door of any processor. Communicating through a cover letter may be the best way to express your; goals, needs and wants to the potential payment processor. When you apply, your application should be fully completed.
Some processors are more lenient than others. They may even decide to give you a call and discuss your concerns. However, a cover letter is the ultimate weapon in your arsenal for looking professional, up front and being approved!
High risk merchant accounts are essential for many companies. Time and standards may change but a good merchant account will take your business to the next level. These accounts can build your organizational credit history. They are the stepping stones that you need to be successful.

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