You need a card payments processing service to grow your business and you apply for a merchant account with your bank. Then you discover your bank won’t handle your business because you are marketing and selling cell phones and they are considered high risk.
Maybe you considered using PayPal or Stripe but that’s not such a good idea. If you are wondering, why are cell phones a high risk merchant account, you need to understand where banks are coming from.
What defines high risk for a merchant account
Card payments processing is a very high volume low margin business for an acquiring bank. Millions of payments every day go through their systems. What they don’t want are glitches or any kind of scenario that raises the risk of problems.
Your business may seem perfectly risk free to you but these features raise red flags at an acquiring bank:
- Chargebacks – The #1 no-no is any industry with a history of fraud and chargebacks. Even the best-run business is liable to experience chargebacks but they have a high cost for banks and merchants. Unhappy customers can simply request a refund from their card issuing bank instead of finding a solution with the merchant. Fraud is the other extreme where a merchant unknowingly accepts payment from a stolen card.
- Products often fraudulent – The Government has highlighted products and services that frequently are found to be fraudulent.
- Regulation – Highly regulated industries like medicine/drugs, alcohol sales and firearms present the risk of breaching regulations. That could lead to costly litigation against all parties involved in a transaction.
- Card Not Present (CNP) – E-commerce business models and MOTO (Mail Order Telephone Order) both mean the cardholder is not face-to-face when the sale is made. The card is not swiped through a terminal. Roughly half of all card fraud transactions happen in these scenarios.
- International sales – Some countries have a history of higher rates of fraud than others.
- Digital products – Physical products have a lower risk profile than digital products and services.
- High ticket values / volumes– Even something as mundane as furniture sales runs the risk of a customer requesting a chargeback for several thousand dollars. High transaction volumes also count as a risk.
- Recurring payments – Subscription services, for example, are frequently cancelled by the customer when they don’t recognize an item on their card statement. They may then request a chargeback rather than cancelling the agreement direct with the merchant.
- These are the main risk areas that acquiring banks have pinpointed as potentially costing them money. Here are about 60 industries categorized as high risk for these very reasons.
Why PayPal or Stripe is not a good idea for a high risk business
Acquiring banks that issue credit cards employ underwriters to assess each and every application for a merchant account. Smaller banks and payment aggregating companies like PayPal and Stripe don’t have these facilities.
It means easier acceptance by them up front but sooner or later they will terminate high risk business accounts. That’s a threat that could ruin your business.
Aggregate payment services have terms and conditions too but they may be buried in the small print. You may succeed in getting an account up and running for a few months. Eventually it will be audited and terminated if your business does not meet their guidelines.
Benefits of a high risk merchant account for your business
Why are cell phones high risk merchants? It’s because providers of high risk merchant accounts operate a business model that takes into account real-life glitches that may occur. They have a greater tolerance for risk than regular banks who only accept applications from low risk businesses.
Depending on your requirements, some of these typical features may be of great assistance:
- Global expansion capability – Grow your business by accepting customers from all over the world and bill them in their local currency.
- Fewer chargeback issues – Low risk merchant accounts restrict chargebacks to around 1% of transactions. High risk merchant account providers apply higher tolerances.
- Sell as much as you want – Transaction volume limits can restrict your business. Worrying about high ticket items is not something you need. These are not issues when you operate a high risk merchant account.
There are other benefits too. We will be happy to fill you in once we understand your business.
How to get a cell phone sales high risk merchant account – or any other business
The important thing to remember is that there is a card payment processing solution for every legal business including the sale of cell phones. While your regular business bank may have turned you down, we can find a merchant account that is a good fit for your business. That’s the best answer for why are cell phones high risk merchants.
That’s because we have spent years building up a network of banking contacts in the payments industry. We know which banks and card processing companies specialize in each business sector. That could be e-cigarettes, cannabis products or any other high risk operation.
Sometimes the best solution involves using an offshore bank and merchant account. That’s because card networks like Visa and MasterCard operate different rules in other parts of the world. Also, governments in foreign countries have their own regulations, which may be friendly towards your industry.
Where to start to obtain a high risk merchant account
You would take a Mercedes Benz to a specialist auto servicing shop. So you need to engage specialist knowledge to get the right merchant account for your business.
This is what we do at Secure Global Pay and we are very good at it. We will quickly enable your business to accept card payments so that you can grow it the way you want.
Your first step is to visit our online application page. Click here to start the process today. We can then match your business with the right card payments service provider. They understand your industry and the unique challenges it faces.
We normally get back to you with a status update within 3 to 15 days, or even faster in some cases.
If you prefer to talk with one of our payment specialists then just call us on 1-800-419-1772. Our friendly experts will be very pleased to answer all your questions and explain the process.