Ecommerce is the buying and selling of goods or services online. It is made up of an extensive variety of systems, data, and tools used by Internet buyers and sellers. Many of today’s online businesses are no longer the traditional retailers of yesterday. Corporate giants have taken over and those that wish to compete in this marketplace now require the assistance of the absolute best high-risk eCommerce merchant account providers to help stay relevant.
Since its inception over 40 years ago, the electronic commerce industry has experienced incredible growth. Global sales have surged past the $4.2 trillion mark and U.S. eCommerce is on track to record its first $1 trillion year in 2022.
Unfortunately, businesses and companies in this industry are deemed high-risk by credit card processors and acquiring banks. This labeling means that high-risk category eCommerce businesses cannot use regular merchant accounts to process credit and debit card payments.
Over the years, retail businesses have used technology to influence people on how they do their shopping and hence, this was how eCommerce was born.
With the rise of mobile shopping, omnichannel retailing, and voice shopping, the industry has evolved yet again.
If you are looking to profit from the eCommerce industry, you need to stay relevant. Keeping up and having an edge over the competition means partnering with the best high-risk eCommerce merchant account providers.
Before looking at the qualities of the best high-risk eCommerce merchant account providers, let us examine why banks and traditional payment processors refrain from offering merchant services in this multi-billion-dollar industry.
Why Banks Say No to High-Risk Ecommerce Businesses
There are a number of reasons why eCommerce businesses are designated as high-risk online merchant accounts. One reason is the degree of uncertainty around them and whether they will succeed or fail.
The electronic commerce industry is riddled with risk and this explains why many banks look the other way and avoid them entirely.
Secondly, merchant service providers see eCommerce businesses as high-risk online merchant accounts because of the instability around their assets.
Most startup eCommerce businesses have insufficient capital and this dims their chances of handling challenges that may come from their businesses.
When these issues rise to the forefront and they are incapable of handling them, the risk is inevitably passed on to the acquiring banks via traditional payment processors.
Additionally, start-ups are more likely to have inadequate processing history and are therefore labeled as high-risk businesses. An insufficient processing history is a red flag that screams “higher-than-average risk” to a traditional merchant account provider.
The services of the best high-risk eCommerce merchant account provider can help a hard-to-place merchant get ahead of this problem. These experienced professionals can help educate merchants on high-risk credit card processing in general while providing solutions to help manage their chargeback ratios.
Consumer distrust of the industry is another issue. Customers expect a satisfactory outcome from using your product or service and are less than happy with an outcome that falls short of their expectations.
This can cause unhappy customers to initiate chargeback disputes on their transactions or lodge friendly fraud complaints that can hold up merchants’ funds and deposits. When you have unhappy or unsatisfied customers, businesses can always expect a ton of fraudulent claims and chargebacks.
Acquiring banks do not like getting involved with industries vulnerable to fraud and chargebacks and the eCommerce industry is no exception with fraud losses expected to exceed $20 billion in 2021.
Best High-Risk Merchant Ecommerce Merchant Account Providers
The specifics of having the best high-risk eCommerce merchant account vary dramatically between hard-to-place payment processors. Only the best ones are able to provide essential services for high-risk merchants that traditional financial institutions cannot.
Due to the high level of risk involved, hard-to-place merchants and high-risk industries should expect additional requirements and several restrictions on their accounts like rolling reserve requirements and monthly transaction limits.
You should also understand that due to the risky payment processing involved with doing business in the eCommerce industry, these high-risk merchant service providers may charge higher rates and fees than their low-risk merchant counterparts.
When searching for the best high-risk eCommerce merchant account provider, don’t just jump in with any provider willing to work with you. Some payment processors charge ridiculously expensive fees by making you think they are the only option, sadly they still end up bungling their services and offering zero value.
What the Best High-Risk Ecommerce Merchant Account Providers Offer
Today’s customer loves paying bills and making purchases online. Any business that is not offering online payment options is missing out on a sizable sum in sales revenue.
The good thing is that the best high-risk eCommerce merchant account providers offer secure and convenient solutions to help you get started.
With their services, you can accept ACH and eCheck payments as well as traditional credit and debit card payments via your eCommerce store.
The best high-risk e-commerce merchant account providers provide the following:
- Integrated shopping cart functionalities
- Enhanced fraud monitoring capabilities with custom parameters
- Top-tier security with PCI-friendly payment processing solutions
Software and Shopping Cart Integrations for Your High-Risk Merchant Ecommerce Merchant Account
When setting up a high-risk eCommerce merchant account, choose a provider that has a robust virtual terminal and API that integrates into front-end software solutions and state-of-the-art shopping carts that sync well with your business.
If you are using a CRM or eCommerce payment software like Quickbooks, consider choosing a high-risk merchant account provider familiar with integrating these tools with your platform.
They can help you save time and reduce the stress of dealing with manual data entries which can lead to a ton of errors.
PCI-Compliance for Secure High-Risk Ecommerce Merchant Account Payment Processing
The best high-risk eCommerce merchant account providers know how important it is to safeguard customer information and protect your business from criminals.
Ensure that you choose a high-risk eCommerce merchant account provider that offers you a PCI-DSS endorsed certified payment gateway and the latest anti-fraud technology.
The best high-risk eCommerce merchant account provider offers a secure online payment gateway and API that does the following:
- Accepts all mainstream credit and debit cards
- Encrypt card payment information from the entry point to the authorization
- Uses the latest security measures like tokenization to curb payment fraud, identity theft and data breaches
In order to reduce PCI scope and some additional liabilities of your online storefront, the best high-risk eCommerce merchant account providers host your virtual checkout form on a safe and secure server.
With this, there is no need to capture the sensitive card details of your customers in your payment environment.
Not only does this cut down fraudulent vulnerabilities, but it also boosts your accountability as a merchant.
The best high-risk eCommerce merchant account providers will also allow you to customize your hosted payment page with your store logo, colors, and formatting. This gives your customers a seamless shopping experience from start to finish when processing payments via a high-risk online merchant account.
How to Apply for a High-Risk Ecommerce Merchant Account
Applications for high-risk eCommerce merchant accounts are free, but the application process can differ from provider to provider. After the application process, you will also have to submit the relevant documents for support.
The best high-risk eCommerce merchant account providers assign a dedicated account manager to make sure your account gets approved as quickly as possible.
Supporting documents include:
- Proof of identity of the signer on the account
- Payment processing history
- Bank statements
- LLC and corporate articles
- Product information
- Product fulfillment agreement with suppliers (i.e. dropshipping)
- Personal credit score
- Business plan
Underwriters review your application to determine the risks associated with processing payments for your business.
The best high-risk eCommerce merchant account payment processors painstakingly confirm the legality of what you are selling and whether you have the right to be offering them from the countries where you are doing business.
They will also take a look at your website and marketing materials to validate that there are no unproven claims with regard to what you are selling.
As a precaution, the best high-risk eCommerce merchant provider ensures that your business is in line with regulatory guidelines in order to avoid any complications in the future.
Always be upfront with your eCommerce merchant service provider of choice and let them know you run a reliable and responsible company. This helps to reduce any hesitation usually associated with a startup or a high-risk eCommerce business.
Tips for Getting Your High-Risk Ecommerce Merchant Account Approved
Checking personal credit scores is part of the underwriting process for the best high-risk eCommerce merchant account providers.
If a signer has a bad credit score, the solution is to add another signer with a better score to facilitate the account getting approved.
Websites are also scrutinized carefully. Ensure that all the links on your site are working and make sure the privacy, shipping, and refund policies are clearly displayed.
Phone numbers and email addresses should be on your website as underwriting teams usually use them to confirm if satisfactory and responsive customer service is being provided.
Underwriting teams representing the best high-risk online merchant account providers never announce themselves. They always present themselves as customers simply seeking information about your services.
Make sure you treat every customer properly and respond promptly to calls and emails. If the calls have to go to voicemail, make sure you leave a brief and professional message using the name of your company and specify the best time the caller can get back in touch with you.
In the case of emails, use autoresponders and let customers know you have received their email and will respond accordingly.
Underwriting departments also conduct online searches. They search the Internet for information about a company, the owners, and the products they sell. The reviews that people are also leaving about your eCommerce small business are also important too.
Before submitting an application, make sure that you know what type of information your business is out there.
Naturally, there is no business with a perfect record. So when confronted with information that portrays your business in a negative light, do your best to give an honest version of your own side of the story.
Underwriters know impossible customers exist and will always give your eCommerce business a torrid time, no matter how hard you try to please them.
Once you can demonstrate that you are in business for the long haul and genuinely care about your customers, you should be fine.
Keep Chargebacks Low in Your Ecommerce Business
There are several ways to keep chargebacks under control in an eCommerce business. As mentioned earlier, the easiest way to do this is to clearly display all refund policies on your eCommerce website.
Once customers contact you for a refund, make the process easy for them. If you think a customer is not being honest, you can dispute the claim. However, make sure you have the facts to back up your claim because customer rights are well protected by consumer organizations.
Use Recognizable Billing Descriptors
Using descriptors for your products or services is another good way to keep chargebacks low because customers get to identify what they are paying for without any ambiguity.
The best high-risk eCommerce merchant account providers advise using proper billing descriptions to identify the product or service being purchased and how a company can be reached if there are any disputes or questions.
This same information can also be included in email receipts after purchases have been made as well as disclosed on the eCommerce website.
Another tip the best high-risk eCommerce merchant providers offer if you are looking to keep your chargebacks low is to let customers know how the purchase will appear on their credit card statements.
By sending this information as a responsible eCommerce business, you are not only reducing the number of chargebacks but also telling customers that their satisfaction is important to you.
Always encourage your customers to get in touch with your customer support team to discuss any problems they might have and send follow-up emails to thank them for their business.
Sadly, no matter how easy you try to make it for customers to get refunds, some customers will still opt for a chargeback.
Get an Early Chargeback Warning
The best high-risk merchant eCommerce merchant account providers also offer early warning chargeback services that let you know when customers get in touch with their banks asking for refunds. This gives you time to double your efforts and issue a refund before the chargeback scales through.
The best high-risk merchant eCommerce merchant account payment processors also take it a step further by helping you determine which chargebacks you should fight and have the best chance of filing a counter-dispute and winning.
Follow Payment Processing Procedures
Each card-processing network has a unique set of protocols they want you to follow when handling card-not-present transactions.
You may be asked to use CVV certification, AVS, customer’s IP address, or submit proof that you have successfully shipped merchandise to a customer’s destination.
Following the appropriate payment procedures will help expose fraudulent transactions before they occur.
Ignoring them may cause a card network to automatically rule in your customer’s favor in a chargeback dispute.