Many startups and small businesses will probably never hear of the term “high-risk merchant account” until their enterprises have been categorized as such. It can be confusing at first, and in some cases, it could feel like an unfair judgment against the products you offer, the services you provide, your business, or yourself. This is not the case. There are numerous benefits to high-risk merchant accounts. Some high-risk merchant benefits include fraud protection, high volume, and high ticket sales, chargeback management tools, and much more. A solid high-risk merchant account can revolutionize the way you run your business, especially when working with qualified professionals like SecureGlobalPay.
Understanding High-Risk Accounts
A high-risk merchant account shows that your business has a higher risk of fraud or chargebacks from a merchant provider’s perspective. It has nothing to do with what your business has done or how you operate it. However, there are many benefits of very high-risk merchant accounts. So why are some businesses classified as high-risk merchant accounts?
Understanding this important designation gives you the upper hand in understanding how merchant services operate. It will also help you identify the ideal payment processing partner to work with your organization.
Nevertheless, there isn’t one industry-wide standard that classifies one business as high risk while overlooking another. The high-risk merchant designation is highly subjective and differs from one acquirer to the next. Some of the factors that make your business more likely to be labeled “High-Risk” by financial institutions include:
The Time Period You’ve Been in Business – The longer you’ve been operating, the more willing service providers you’ll have available to work with you.
You Work From Home – Your business location matters, and home-based enterprises are considered riskier propositions for payment processors. Additionally, operating your business overseas could also classify you as a high-risk merchant account. Consider your entire business model before
Chargeback Ratios – Chargebacks are a critical factor that payment processors look at. It is, therefore, essential to avoid them whenever possible. Come up with clear policies to mediate client issues, provide refunds, and communicate clearly with your clients to prevent chargebacks.
History With Other Merchant Providers – Your history will always follow you! It is, therefore, imperative to keep your records and be transparent when looking for new merchant providers.
Your Personal Credit – Your personal credit has a more significant impact than you might realize when shopping around for merchant account providers. Ensure your credit score is up to par to help increase your chances of approval.
Your Business or Industry is Identified as High-Risk – Some industries are considered riskier than others from a payment processing provider’s perspective. Some of these high-risk businesses include:
- Adult products and online dating services
- Credit repair
- Travel services
- Annual membership services
- Website design
- Multi-level marketing
There may be other verticals not included in the above list that identify your business type as high-risk. If you have any questions about the application process, you can reach out to a reputable merchant service provider for more information.
Top Advantages of High-Risk Merchant Accounts
With major credit card processors and acquirers now making massive investments in their infrastructure, more people are using payment cards for their transactions than ever before. No wonder credit cards and debit cards are more popular options than cash transactions.
As a result, numerous merchant payments are taking place globally. If the trend continues, there’s a good chance that there will be massive growth in their numbers soon.
It is crucial to get a merchant account by working with a reputable payment service provider. Most providers usually offer integrated solutions so that your business can accept an array of currencies and payment methods. Below are the major benefits you can reap by getting a merchant account.
Accepting Debit Card and Credit Card Payments
Credit cards and debit cards are considered the standard way of doing transactions, hence their popularity with many clients. Therefore, if your business is optimizing customer service, you should consider avoiding any potential problems regarding purchasing or payment acceptance. This will help attract potential clients, improve SERP rankings, and even improve revenue.
Clients are expected to transact using these cards both online and in-store. Reputable payment service providers will help process mobile and eWallet payments. This allows your business to serve a larger market. Research also shows that most customers are willing to spend more money when using credit card processing methods.
Reputable merchant providers ensure that your customer’s data on the card is more secure. These service providers are certified to follow specific security protocols. They also use advanced technology to detect fraud, implying your credit card and debit card data are always secure.
Accepting Multiple Currencies
Another significant benefit of having a merchant account is that you can accept numerous currencies. This means you can serve many clients around the world. These clients can pay for your services and products using their local currencies. Customers will always come back to purchase your products and services when it’s easy to make payments.
Better Money Management
A merchant account allows you to start accepting digital payments, meaning that you can be more organized and efficiently manage cash flow. In some instances, your payment service provider can send you a monthly statement for the transactions made with all currencies accepted. This can ease how you handle taxes while following how you earn profits.
Simply put, the merchant account service allows you to view and manage payments using the online interface.
There’s no doubt that a merchant account can improve the satisfaction of your clients. Thus, they can come back to make more purchases as it provides flexibility to buy the items they want conveniently. Your clients can use credit cards, debit cards, or even mobile payments to make their payments.
Easy, Streamlined Setup Process
High-risk merchant accounts have an easy and streamlined setup process. This is an excellent option for many businesses, especially those offering an array of services. The entire process can usually be done online, and in most instances, the application can be approved within 3 days. This will allow your business to hit the ground running instantly.
Protection Against Chargeback and Fraud
When a high chargeback occurs on a high-risk account, security is in place to protect your business against fraudulent activities. In most instances, a high-risk merchant payments provider will initially need your company to set up a rolling reserve to offset any potential chargebacks that might occur.
The reserve fund is usually set at a predetermined percentage of the business’s average monthly sales. However, this amount is mitigated by several factors.
By working with reputable high-risk payments providers, your business will reap the numerous benefits of high-risk merchant accounts discussed above. Give us a call, and we’ll be happy to discuss how we can assist.