Finding the best high-risk merchant account is essential for businesses trying to operate in the high-risk space. In any industry, eCommerce customers are used to paying with debit or credit cards so it’s important to have the right payment options.
What makes a company high risk? The term is used by banks and processing companies to categorize certain verticals or businesses that present different types of predictable challenges. These may include chargebacks, legal restrictions, age verification, and more.
High Risk Merchant Accounts and Payment Processors – Key things to know
High-risk payment processors are the companies who help you establish a merchant account in a high-risk industry. When customers shop and make purchases on your site, the funds are deposited into your merchant account. These transactions are usually with a credit or debit card. However, new payment types such as cryptocurrency are opening up new ways to pay.
You may be wondering why certain industries are high risk, and what this has to do with customers buying something from your shop. The risk lies in the fact that certain predictable issues surface in different types of businesses.
The major concerns banks identify include fraud, chargebacks, and unique product listings. Fraud takes many forms. It can be someone using another person’s credit card, or claiming they received a faulty product. Chargebacks happen when a customer goes to their bank (the one that issued their credit card) and makes a claim to reverse the payment. Lastly, items such as CBD, Vape, Firearms, or even Adult Products, have industry-specific concerns for banks.
In order to qualify for a merchant account and to get lower fees and fast approvals, you’ll want to prove your company has lower risk. To do this, you should establish a history of payments. This means sharing your last few months of transactions with the high-risk processing company. They’ll be able to see your chargebacks and the amount of revenue processed in your current account. With this information, they can lower your rates and negotiate on your behalf to reduce the costs and fees.
What Is A High Risk Merchant Account?
A high-risk merchant account is a type of bank account that is custom-made for companies in the high-risk space. There are different criteria for the type of account you’re looking for, but they all take into consideration potential risks.
Moreover, a processor may look at your product or service and determine there is a higher chance of fraud associated with it. In this case, the risk is that the merchant may incur higher chargebacks or friendly fraud transactions. Banks have to offset the extra resources your account requires by categorizing your account appropriately.
Are You In A High Risk Industry?
The high risk might also mean that you’re within a legally restrictive industry. For example, CBD, cannabidiol, and hemp laws change constantly. Additionally, each state has its own regulations when it comes to the sale and association of related products. Many states require specific testing standards which, if difficult to obtain, can cause difficulty in your business growth.
Best High Risk Merchant Account Providers
The top merchant account providers are equipped with their own key offerings. Some cater to instant approvals, while others will allow higher chargeback rates. In addition, there are merchants who work with offshore accounts while some may focus on national CBD regulations. Each business has a credit card payment processing solution that is the best for their demands.
How To Identify The Best Merchant Services
Researching the best merchant services can sometimes be overwhelming. However, securing reliable payment processing is an important factor in your company’s long-term success. Therefore, finding the very best merchant services can streamline the way payments are accepted by your business and increase your earnings.
Aggregate Payment Services (Low Risk)
Payment facilitator service providers pool payment processing into one giant merchant account for all of their clients. Although this offsets some risks, merchants experience more glitches and receive less customer support. The better the rates, the more likely you’ll be on the back burner when it comes to customer service and high-risk sustainability.
Point of Sale Systems
Many of the best merchant services providers also offer point-of-sale systems. POS systems are like versions of payment readers – they are also able to scan barcodes, calculate sales, track inventory, print receipts. Incidentally, payment gateway providers have started to provide merchants with shopping systems, like checkout experiences and eCommerce platforms.
Best Merchant Services Financing
Many of the best merchant services suppliers have begun to offer merchant financing. This step offers merchant cash advances to merchants who want to purchase more inventory or fund investments. They offer lump sums of capital for future portions of the credit card sales the business makes. In addition to the predetermined fee, the money is reimbursed over time.