If you are running a business and you don’t have a payment processor, then it will be difficult for you to manage your business. Most people rely on payment processors like PayPal, Skrill, Stripe, etc. Thanks to these services because they help your business run smoothly. But your business will be troubled if these payment processors discontinue their services to you.

Among tons of payment processors ready to serve your business, Global Pay, PayPal, Skrill, Stripe, etc. are the most popular ones. And they are almost the same.

There are mainly three types of businesses. The very first category is the regular businesses which are supported by almost every payment processor. Another category is prohibited businesses like online drug selling, and the last one is the high risk businesses such as digital products. The third category is surprisingly broad.

 

What can make your business a high risk business?

There are two reasons. First one is product type. If the product is software or other online deliverables, then it’s often typed as high risk because there is no tracking number for shipping and there is no easy confirmation of delivery. If disputes or chargebacks begin, payment processors need to solve it. For digital products, it is much harder to track the delivers, where the delivery is a link in a confirmation email or a software product key.

The second factor is the rate of chargebacks and disputes. Chargebacks and disputes are very common with digital products, and they are easy to scam. Such product sellers do business globally, not only in the primary business area of payment processors. So it makes for more difficulties with the payment processors.

Because of this high amount of chargebacks, payment processors are strict with these type of companies. If any business is having a large number of chargebacks and disputes, payment processors usually flag them for review and terminate their account.

Another problem is financial damage. If a business owner knows that their company is going to have a lot of chargebacks, they could easily close out there PayPal or Skrill account and run away with the money. When the chargebacks come in, the payment processors can do nothing but refund the customers with their own money. That’s why some of them often require a reserve account.

The payment processors mostly close an account if any company causes anything that makes them pay when they shouldn’t be paying. They can also close the account if a company undermines their relationship with any financial institution. They are doing this because it is easier to terminate a small business account than dealing with a big bank.

 

Dealing with the risk

It is very easy for payment processors to terminate a small business. But think about the small company. How will they deal with it? They will have a bad impact on their business.

The safest way is signing up for merchant processing via a payment service provider, similar to Global Pay LTD. Their banks can easily deal with the chargebacks and high risk businesses. So if you are starting a small business or you already have one, you can easily use companies like PayPal. But if you think that yours is a high risk business, you better choose a solid processing partner.