High-risk and high-volume merchant accounts are customized payment solutions with intelligent transaction routing and multiple merchant account payment processing. These specific merchant accounts mostly serve enterprise-level merchants that continuously need to scale and diversify their payment processing needs. That’s probably not surprising to anyone, as most people reading this know very well that there are different types of merchant accounts out there. But what might come as a bit more of a surprise is just how many unique characteristics and dynamics these high-risk high volume merchant accounts have.
Top 5 Reasons Why High-Risk High Volume Merchant Accounts Are a Special Breed
With the right understanding of what makes high-risk high volume merchant accounts their own special breed, you can better understand the advantages they present to your payment processing needs and why so many enterprise-level businesses choose them. Read on to learn why high-risk and high volume merchant accounts are so unique.
High-Risk High Volume Merchant Accounts Require Unique Security Measures
At the root of everything, high-risk high-volume merchant accounts require different security measures because they present a higher risk to the acquiring provider.
This means that you’ll need to build trust with your merchant provider. You’ll also need to show the acquiring bank that you know what you’re doing when accepting credit card payments. Most importantly, they need to know that you’re being responsible and that you’re being trustworthy.
For this reason, high-risk high volume merchant accounts require some specific security measures. Most likely, this will be in the form of an increased reserve depending on your business type. Merchants that process high volumes of transactions need higher levels of due diligence and continuous monitoring due to anticipated higher fraud rates.
The increased reserve means that you’ll need to have a higher amount of money available in your reserve account if a chargeback happens. It is there to ensure you have the funds necessary to reimburse the acquiring provider should any issues arise.
A higher level of due diligence means that you’ll need to provide the acquiring provider with more information about your business. This typically includes things like your business structure, your ownership records, and your business license. Keep in mind that this should be the information that you already have available.
Finally, higher fraud rates mean that you and your merchant account provider need to be prepared for a higher rate of chargebacks, as there are likely to be more fraudulent transactions happening. Preventing and reducing chargebacks is key for a long-term, professional relationship with any payment provider.
High-Risk High Volume Merchant Accounts Are Customizable
High-risk high volume merchant accounts are not a one-size-fits-all solution. They are highly customizable. This means that the acquiring bank should be able to tailor the specific terms of your account to suit your business’s needs.
Customized Fee Structure
Depending on your specific needs, the acquiring provider might be able to adjust things like percentage rates, transaction fees, chargeback fees, early termination fees, various monthly fees, and most importantly, the reserve and holdback amount.
First and foremost is the markup. This is the rate at which your merchant service provider will charge you over and above the cost, buy rates, or interchange fees for the specific card types accepted. The markup usually depends on the business type and risk level associated with accepting payments. Typically, high-risk high volume merchant accounts have higher costs overall.
The per-transaction rate is the rate at which your merchant payment provider will be charging you for each transaction. Transaction fees can vary depending on the type of transaction being processed.
There will most likely be a monthly minimum, which is the amount you must keep in your account each month. The monthly minimum for high-risk high volume merchant accounts is also a bit higher than standard providers. However, this also allows for more flexibility.
There will also be a monthly fee, which is the amount that you will be charged each month.
Finally, the reserve is the amount of money that your acquiring provider will require you to keep in your reserve account as a safety measure. The reserve requirement for high-risk and high-volume merchant accounts tends to be higher. However, this also depends on the business type and the risks associated with accepting payments.
The above factors allow your high-risk high volume payment processor to be more flexible than a standard provider. As the high-risk merchant services relationship and processing history develop between the provider and the business, these fees and restrictions can be adjusted to be more favorable over the long term.
High-Risk High Volume Merchant Accounts Are Often Best for Reputable Goods or Services
This means that it’s better to be selling goods or services that are not easily counterfeited or claimed as not having been provided. Your reputation speaks for itself and a good first impression goes a long way.
If you’re processing reputable goods or services, the likelihood that someone will try to claim that you’re selling them a fake product or service is much lower. Or, if your business is providing the absolute best products and services possible, you’re also less likely to see a higher rate of chargebacks and fraud.
High-risk high volume merchant accounts can make sense for all types of reputable businesses and services, such as online doctors, lawyers, and online retailers. However, they can also be a good fit for various alternative industries as well. As long as the business takes pride in the products or services they provide, and stands behind them 100% without question, there should be very little concern about chargebacks in general.
High-Risk High Volume Merchants Benefit From Lower Percentage Rates and Transaction Fees
The high-risk high volume nature of your business could potentially mean that you’ll be able to negotiate better rates and fees with your merchant account and payment service provider. Even more true if your company is turning over a significant volume of transactions for a longer period of time.
Please keep in mind that you’re better off negotiating after you have already established a relationship of trust with your acquiring provider. There is no reason to try to negotiate these terms at the beginning of the process. In fact, these are better negotiated later after some history is established.
Intelligent Transaction Routing and Load Balancing
Some high-risk high volume merchant accounts offer intelligent transaction routing and multiple merchant account payment gateways. These features allow you to route your transactions to different acquiring banks and payment providers, depending on the type of transaction and requirements needed.
This can be done based on the transaction amount, the transaction type, or even the customer’s card type. This will give you a way to balance out the higher rates of chargebacks that you’ll likely experience with high-risk high volume merchant accounts.
Multiple merchant account payment processing allows your transactions to be routed to the acquiring bank and payment provider that gives you the most approved volume, best rates, least reserve, etc, you can rest assured that you are well diversified and in full control of your small business or larger enterprise operation.
This can help you make up for the higher rate of chargebacks, and it can help you make more money overall.
Multiple Merchant Account Payment Processing
Some high-risk high volume merchant accounts allow you to accept more than one type of payment method. This can include things like credit, debit, e-check, gift cards, or even crypto payments.
Most importantly, it is the functionality that allows you to accept payments through more than one merchant account. Having more than one merchant account for your high-risk high volume business model is of utmost importance when managing chargeback ratios.
With so many different high-risk acquiring banks and payment providers, you’re bound to have a few that are better than others. With multiple merchant account payment processing, you can establish relationships with multiple providers at once to help identify the best fit for your business.
What to Consider When Looking for a High-Risk Merchant Account
You’ll want to keep a few things in mind when looking for a high-risk merchant account.
First, make absolutely sure that you are applying for an account best suited to your business type. This means you’ll want to apply for a high-risk or high-volume merchant account, or possibly a combination of both. It may be tempting to apply for a standard merchant account with lower rates and fees, but it may not be worth it if it means losing money or having your account terminated.
Next, make sure you’re applying for an account with a reputable payment service provider. This will help ensure that you have a trustworthy relationship from the start. You can often tell how reputable an acquiring provider is based on their reviews.
Finally, make sure you choose an account with affordable rates and reasonable funding times.
The Reputation of High-Risk Merchants
One misconception is that high-risk merchants have a bad reputation. This isn’t accurate, as many genuine and even high-end sectors can fall into high-risk categorization.
It is a shame that there are negative connotations regarding high-risk merchants. In reality, the main risk associated with high-risk merchant accounts isn’t the potential for fraud (although that is a concern, too). Instead, the main risk associated with high-risk merchant accounts is chargeback risk.
That’s because high-risk merchants and high-risk merchant accounts are commonly associated with industries where chargebacks are more likely to happen.
As a result, these high-risk merchant accounts are often limited to the payment methods they can accept.
What is a High Volume Merchant Account?
There are different definitions of what classifies as high volume. However, we define high-volume merchants as those that process credit card & debit card payments with a volume of at least $100,000 per month.
Often these merchants are online sellers, mail order, or telephone sales-type businesses. There is a very large range of other business models that fall into this classification:
At SecureGlobalPay, we typically provide high volume merchant accounts for companies like:
- Property management – Including monthly rental fees, management fees, and timeshare fees
- Merchants with SAAS business models (recurring fees for services)
- Subscription sales companies ship products regularly
- Membership fee subscription models
- Online businesses selling digital products
If your business is processing large volumes of transactions per day, even micro-transactions, then partnering with SecureGlobalPay could significantly benefit your business.
Benefits of a High Volume Merchant Account
There is far less chance of your business running into issues with a high volume merchant accounts than with traditional processors.
Instead of worrying about restrictions or bans from your payment processor, you and your team can focus on expanding the business. It gives your company the ability to grow confidently.
On top of this, because of the volume involved, these accounts also come with the highest level of security – built-in as standard. For large transaction businesses, additional client verification can also be provided to reduce possible issues.
Finally, fees can be in your favor. While high-risk high volume merchant accounts can come with higher than standard fees, these fees can often be reduced once you build up a relationship, largely due to the significant volume of transactions and the account being of value.
Depending on your industry and processing volume, considering a high volume merchant account, high-risk merchant account, or high-risk and high volume merchant account can provide your business with the support it needs to safely expand.
Characteristics of High-Risk and High Volume Merchant Accounts
There are some characteristics and dynamics that set high-risk and high volume merchant accounts apart from one another. Mostly, these characteristics have to do with the heightened chargeback risks associated with the business type.
Seeing as high-risk merchant accounts are associated with higher chargeback risk, accepting payments through these accounts often comes with certain restrictions. For instance, high-risk merchant accounts can often only accept certain payment methods or accept certain card types but not others. Additionally, high-risk merchant accounts often come with high sales volume requirements.
Key Advantages of High-Risk and High Volume Merchant Accounts
Despite some of the negative reputational implications of high-risk merchant accounts, they come with significant advantages like higher acceptance rates and multiple merchant account flexibility.
As a result of the higher per-transaction fees charged by high-risk merchant accounts, most business owners choose these accounts when they are struggling with standard merchant account providers holding their funds or terminating their accounts without notice. This means that businesses that opt for high-risk merchant accounts are often confident they can bring in enough revenue from each transaction to cover their costs. After all, the higher per-transaction fee will be baked into the price of each transaction and often into the pricing of items sold.
They then benefit from the flexibility and ongoing review of their account, with the possibility of getting all the benefits at a discounted price if the company can prove itself to be reliable and lower risk.
In short, high-risk high volume merchant accounts are a special breed because they come with a higher risk of chargebacks and volume requirements. SecureGlobalPay has extensive experience in supporting these types of businesses.
High-Risk high volume merchant accounts can often obtain a balance between the advantages of these services and costs incurred.