Some Canadian businesses are subject to high-risk merchant processing Canada regulations. They are considered high-risk for many reasons, the most common being cross-border acquiring, chargebacks, and fraud. High-Risk merchant providers Canada offer high-risk merchant processing solutions to support these riskier business models.
For Canadian high-risk merchants, it isn’t easy to find acquiring banks or payment processors. When these merchants can not get approved for high-risk merchant accounts, they cannot accept card payments from customers.
In this article, we’re going to delve into what is considered high-risk merchant services Canada, what problems high-risk merchants face, and how to find a competent payment processor like SecureGlobalPay.
What Is High-Risk Merchant Processing Canada?
A high-risk merchant account is a business bank account that has been classified as high-risk because its products and services make them prone to fraud and chargebacks. A Canadian bank may have several additional justifications for labeling your business as high-risk.
The most common reason is the industry you operate in. Additionally, your business is likely to be labeled as such if it operates in a high-risk industry where there are more instances of fraud and chargebacks. These industries often include dietary supplements, gaming, adult, casinos, travel, nutraceuticals, and many more.
Other reasons you may have to run a high-risk merchant processing Canada account include selling to international markets, running a large volume of transactions, or using a subscription payment model. If you’re a new business, have a bad credit score, or undergoing credit repair, your business is also considered high-risk.
Being a high-risk business means that you cannot accept card payments unless you are able to secure a proper high-risk merchant account. To accept card payments as a high-risk business, you have to find banks, and payment processors, familiar with your industry and that are willing to work with you.
Different banks and high-risk payment processors have various criteria for deciding which businesses are considered high-risk. They also have particular policies for partnering with them.
What Disadvantages Do High-Risk Merchant Accounts Suffer?
Higher transaction fees
High-risk merchant services Canada accounts pay high transaction fees. Compared to low-risk businesses, high-risk merchants can often pay double compared to what standard retail businesses pay. Acquiring banks have higher costs to manage these riskier business models and do so, via a high-risk account.
Longer contract terms and early termination fees
As a high-risk merchant, you may have to sign a longer contract term. If you decide to switch banks or payment processors before a contract is over, you could possibly pay an early termination fee.
Many high-risk merchants in Canada are subject to rolling reserves and holdbacks. This is when a bank holds a percentage of each transaction and releases it later. This date is usually included in the contract you sign. The bank may also impose a capped reserve or upfront reserve.
Higher chargeback fees
A chargeback occurs when a bank reverses a transaction because a customer lodged a complaint or dispute. Chargebacks are different from returns and refunds because the customer reaches out directly to the bank.
Even though chargebacks can happen in any business, high-risk merchants pay higher chargeback fees.
Why You Need a High-Risk Merchant Processing Solution
You won’t have to worry about finding an acquiring bank
Opening a high-risk merchant account with a payment processor lifts the burden from the bank in doing so. Typically, as a business owner, you apply to a bank asking them to open your business checking account. In most cases, these banks are unable to process your credit card transactions and have to refer this business out.
A high-risk payment processor already has partnerships with banks ready to manage high-risk merchant accounts.
Accept debit and credit card payments
According to a recent survey, 60% of customers prefer to pay with a credit card or debit card. Once you have an active high-risk merchant account, you can accept card payments from anywhere in the world.
Easily settle customer disputes
When you have a high-risk merchant processing Canada account, it is easier to settle any disputes between you and your customers. Most high-risk payment processors have robust payments gateways for high-risk businesses that help you mitigate and manage fraud.
Grow your customer base
Once you have set up a high-risk merchant processing Canada account, your customer base grows exponentially. You accept card payments and can process international payments. That extends your business beyond Canadian shores.
How To Open a High-Risk Merchant Services in Canada
The process of opening a high-risk merchant account is pretty straightforward. Find a reputable merchant payment processor and sign up. Make sure it works with high-risk businesses registered in Canada and that it allows for international transactions.
Unlike other businesses, a high-risk business merchant account is not quickly approved. You have to provide many documents, and the process takes several days.
Some of the commonly required documents include:
- Legal name and government verified ID
- Documents proving business ownership
- Stakeholder information
- Business or personal bank account statements
- Backend access to website and business processes
Steps To Choosing a High-Risk Merchant Processor Canada
Find a payment processor that has a long track record
You should partner with a merchant payment processor that has already proven its weight in the market. Verify how long they’ve been in business and what reputation they have built for themselves. See if they offer different kinds of merchant accounts.
Confirm they are able to process both domestic and international card payments
Your business should accept card payments from as many interested customers as possible. See what cards the payment solution processes and how many countries and currencies.
Read terms and conditions carefully
High-risk merchant processing Canada accounts may have to sign contracts for extended periods.
We strongly recommend that you carefully go through the terms and conditions of a high-risk merchant payment processing solution.
Check chargeback ratios and chargeback fees
Some payment processors close down a merchant account when the chargeback ratio gets too high. “Too high” is defined differently by each merchant processor. Make sure and ask what they are.
You must know the extra fees they deduct per transaction and chargeback. Compare this with other payment processors.
Also, check how the acquiring banks actually process chargebacks. What method of delivery do they have for notifications?
Find out what steps they take to verify merchants
If you find one of the few high-risk merchant providers Canada that do not ask for detailed information, you should probably avoid them. Working with a merchant processor that does not correctly verify high-risk merchants will definitely waste your time.
Why Choose SecureGlobalPay For High-Risk Merchant Processing?
SecureGlobalPay is a payment services provider that has worked with many Canadian high-risk merchant services to ensure that they can easily accept card payments. Open a high-risk merchant account with Secure Global Pay for the following reasons.
SecureGlobalPay – High-Risk Merchant Providers Canada
- Worked with high-risk merchants for decades
- Partnered with several top-notch acquirer banks
- An application process that is relatively easy and fast if you provide the necessary documents
- Chargeback preventions solutions to help mitigate and manage fraud
- No setup fees and fair transaction fees
- High-risk credit card processing solutions
Sign up with SecureGlobalPay or contact sales for more details.