High-Risk Merchant are often those that deal with a high volume of cash or have many transactions as part of their business. If you operate one of these types of businesses, you might be concerned about whether you can get a merchant account and credit card processing to meet your needs.
With so much red tape and regulations, it may seem like the options are few and far between. But the truth is there are plenty of good solutions for high-risk merchants – you just need to know where to look. If you’re a high-risk merchant who processes payments on a daily basis, then you already understand the importance of secure payment methods.
When selecting your payment processor and whether or not to get a high risk Merchant Account, there are some things that you need to think about before moving forward with anything.
Who is a High-Risk Merchant?
A high-risk merchant account is designed for businesses that pose a higher risk of chargebacks, fraud, and other payment issues. If you have a high-risk merchant account, you may have to pay an annual fee and/or a higher interchange rate or processing fee.
This can make it challenging to find a processor that offers rates that are competitive, let alone one that is specialized in serving high-risk merchants. If your business is high risk, you’ll want to make sure that you find a processor that specializes in serving high-risk merchants.
High-risk merchants are often those in the following industries.
Travel, Gift Cards, Firearms, Pre-paid cards, Publishers, Resellers, Wholesalers, Telemarketers, and those that handle a high volume of cash transactions. High-risk merchants may also include those that have a history of chargebacks, fraud, or other payment issues.
Why are Merchants Classified as High Risk?
The short answer to this question is that it’s all about risk. In terms of credit card processing and high-risk merchant accounts, the risk associated with each business is factored into the rates and terms that each merchant account provider offers.
For example, if you have a history of chargebacks, you will unfortunately have a much more difficult time securing a merchant account than someone who does not have any issues. If you currently have a merchant account, and you’re classified as high risk, it’s important to understand why.
Your processor will provide you with information outlining the specific reasons that they’ve deemed you high risk. This will give you insight as to what you can do to improve your situation and hopefully be removed from the high risk list.
Benefits of a High Risk Merchant Account
While high-risk merchant accounts may come with an annual fee and/or a higher per-transaction rate, they can also come with benefits such as higher deposit limits, extended hours of operation, and assistance with chargebacks.
High risk merchant accounts are designed for businesses that have a history of chargebacks and other payment issues. If you have ever had a chargeback, it is highly likely that you will have a difficult time getting approved for a merchant account.
Many high risk merchant account providers are specifically designed for businesses that have a history of chargebacks and other payment issues. These types of merchant account providers often have the best rates for high risk merchants. If you go with a traditional merchant account provider, you will most likely be charged higher fees and have a much more difficult time getting approved.
Safest Options for High Risk Merchants
If you are a high risk merchant, it can be challenging to find a credit card processor that will work with your business. Fortunately, there are still some safe options for high risk merchants:
Prepaid Cards : Prepaid cards are a safe option for high risk merchants. Prepaid cards do not require a credit
Check or application : they are simply purchased by the customer. This makes them a more secure option than a debit or credit card for high risk merchants. One of the drawbacks is that prepaid cards are only accepted at certain businesses, such as gas stations, grocery stores, and pharmacies. Be sure to check with a company to see if they accept prepaid cards before using this option.
Gift Cards : Gift cards are another safe option for high risk merchants. You can purchase pre-loaded gift cards from credit card companies and then sell those gift cards to your customers. This is a great option if you are looking to conduct online transactions.
In-Store Purchases : If you have a high-risk business and need to accept credit card payments in-person, consider using an Interchange-approved mobile credit card terminal.
E-Wallets : E-wallets are easy to use and monitor, which makes them a secure option for high risk merchants. Some examples of e-wallets include PayNearMe, PayPal, and Venmo. Gift Cards: Gift cards are another safe option for high risk merchants. You can purchase pre-loaded gift cards from credit card companies and then sell those gift cards to your customers. This is a great option if you are looking to conduct online transactions.
What makes a business high risk?
There are many businesses that are classified as high risk. The primary reason for this designation is that these businesses have a history of chargebacks and other payment issues. If you have had a chargeback in the past, you are likely designated as high risk.
Other reasons for being categorized as high risk may include being very new to the business, being in a new industry, or being in a new part of the country. It’s important to keep in mind that even if you think a particular industry is high risk, it does not mean that you will automatically be categorized in this group.
All payment processors have their own criteria for which businesses they consider to be high risk. If you have had a chargeback in the past, your best bet is to look for a high risk merchant account provider.
What to do if you need a high-risk merchant account
If you are a high-risk merchant and need a merchant account, your first step should be to get a credit report. You can do this for free at AnnualCreditReport.com. Make sure there are no errors in your report, as this can affect your ability to get approved for a merchant account.
Once you have your report, you can begin searching for a high risk merchant account provider. Begin by searching for “high risk merchant account providers” on Google. There are several websites that specialize in finding high risk merchant account providers. Once you have a list of potential providers, make sure to do your research.