For high-risk businesses, the number of default options for accepting payments online is limited. Merchants often have no access to the most popular payment methods, other than those done via a high-risk eCheck gateway.
Echecks are the preferred payment method after debit and credit cards for high-risk businesses. Echecks are popular with customers because of their convenience, and business owners prefer them because of the higher tolerance for chargebacks and returns.
This article will discuss what a high-risk eCheck gateway is and how to apply for one. Contact SecureGlobalPay merchant services today to apply for a high-risk eCheck merchant account.
What Is a High-Risk eCheck Gateway?
A high-risk eCheck gateway is a payment processing alternative that allows merchants to accept electronic check payments. As long as the customer has a checking account, you can accept eCheck payments from them. Echecks are essential for businesses because they provide an alternative to credit and debit card payments while also allowing for lower transaction fees. Echeck processing also allows for recurring billing options for online payments.
Industries like travel, nicotine sales, and nutraceuticals are considered high-risk. Many banks and financial institutions refuse to partner with these businesses because of their higher chances of chargebacks and fraud. Because of this, merchants have to open high-risk merchant accounts that allow for the acceptance of payments with both credit cards and eChecks.
How a High-Risk eCheck Gateway Works
When a customer wants to pay you with an eCheck, all they do is enter their bank routing number, account number, and account name. The money is removed from the account but does not leave the bank until it is settled. eCheck transactions are similar to credit card processing transactions as they also allow for recurring payments.
The customer’s bank holds the funds for a few days. Once cleared, the money will be credited to your business bank account. The entire process takes two to three days. An e-Check is similar to a paper check, except it is sent online to your bank.
How to Apply for a High-Risk eCheck Gateway
Getting a high-risk eCheck merchant account approved is relatively easy. Submit the relevant documents, fill in the requested info, and wait for the decision.
Some of the documents needed are bank statements going back several months, a voided check showing your bank, and a certificate of business ownership. You will also have to provide your ID and phone number.
Depending on the industry, underwriters will do various pre and post-approval checks, including a thorough review of the website. Their job is to help ensure your business is not fraudulent while satisfying the underwriting criteria of the acquiring bank.
Make sure you include the correct email address and contact information when applying. While waiting for approval, make sure and respond to all emails ASAP requesting additional supporting documents.
It takes anywhere from two business days to a week to get your merchant account approved for a high-risk e-check gateway. Some processors allow instant approvals and close down accounts later. Be careful of this!
Benefits of a High-Risk eCheck Gateway
Higher tolerance for chargebacks
A chargeback happens when a customer disputes a charge made to their bank account, usually because they feel defrauded. Chargebacks are different from returns because the customer reaches out to the bank directly bypassing any customer support options that may be available.
ACH payments allow for only a 0.5% chargeback rate. Card payment processors tolerate below a 1% chargeback rate. eCheck processing gateways can allow for up to 10% chargeback rates with high volumes of transactions.
Increase your customer base
eCheck is an alternative option for customers who don’t want to use their cards. Once they enter their bank details, their account is debited immediately and sent for clearing and settlement. If your business does not offer an alternative to paying with e-Checks, you could lose several customers.
Having many payment options on a website increases your business credibility. Customers are more likely to trust you if many payment methods are listed.
SecureGlobalPay is in the business of providing high-risk industries with as many digital payment options as possible. Apart from eCheck payment gateways, SecureGlobalPay offers high-risk ACH, credit card and debit card processing, crypto payment processing solutions, and more.