High-Risk Merchant Processing Accounts for Businesses
All business ventures come with an amount of risk; but some businesses pose a bigger risk than others. SecureGlobalPay high-risk merchant processing specializes in the approvals of high-risk category merchant types with high chargeback ratios.
Businesses that pose a higher risk than others are usually businesses associated with a high percentage rate of chargebacks and fraud.
Excessive chargebacks and fraud make traditional banks and payment processors uncomfortable. SecureGlobalPay’s vast network of high-risk credit card processors allows merchants to help diversify their portfolio of acquirers when selling their hard-to-approve products or services.
If traditional low-risk payment providers offer services to high-risk businesses that incur losses they cannot cover, the onus tends to fall on the acquirers and sponsoring banks to offer compensation.
Additionally, these payment processors can also be penalized through various mitigation programs and have massive fines accessed when unable to mitigate their losses. The fines are then enforced by card associations looking to maintain their reputation. Further oversight and monitoring continues to ensure the business environment is not overrun by repeated disputes and fraudulent credit card transactions.
This is the main reason why traditional institutions choose to steer clear of high risk category industries.
For any business operating in a high risk category industry riddled with numerous cases of chargebacks or fraud, opening a high-risk merchant processing account is the only option for successfully processing card payments.
Merchants that have been terminated for these 2 reasons need high-risk merchant processing services.
What is a High Risk Category Merchant Account?
A high risk merchant account is an account given to businesses classified as “high risk” or “hard to place”.
Businesses in this high risk category tend to have high chargeback ratios well above 1%.
Characteristics of High Risk Businesses
A processing history riddled with fraud and high chargeback ratios are the main reasons businesses are seen as unpredictable and volatile.
However, payment processors have other reasons why these businesses should be considered risky ventures.
- Accumulated monthly sales of $100,000 or more
- Average high ticket transaction of $500 or more
- Transactions accepted in multiple currencies
- Poor credit score and credit history
- Operations in countries with prevalent fraud and low internet security
- Card not present business
- Recurrent subscription type payment services
- High volume of transactions
Below is a roster of some industries categorized as high risk by banks, payment processors and card associations.
- Gambling
- Adult entertainment
- Dating
- Web design
- Software
- Electronic cigarettes
- Pawnshops
- Casinos
- Business opportunities
- Bail Bonds Payment Processing
- Escort services
- Fantasy Sports Websites
- Travel and leisure services
- CBD
- Prepaid cards
- Skin and Hair
- Digital downloads
- Multi-level marketing
- SEO and SEM services
- Pharmacies and drug stores
- Debt consolidation
- Collection agencies
- Furniture
- Firearms
- Tobacco
- Background checks
- Credit repair
- Life coaches
High risk merchant category codes can also be used to determine a merchant’s status.
Finding the Right High Risk Merchant Processors
There are a number of things to look out for when considering a high risk merchant processor.
This is necessary because there are quite a number of dishonest processors looking to sink their teeth in desperate merchants not educated on how to reduce chargebacks and conduct their high risk business models properly.
These companies hardly deliver on their promises and use different loopholes to fleece money off high-risk businesses.
On the other hand, there are some high risk specialists that have remained ethical and honest. These payment providers do what it takes to get merchants the best deal on high-risk merchant processing accounts.
4 Ways to Choose the Best High Risk Processors
Specialization: When deciding on a high-risk payment provider, make sure the company meets all your payment processing needs.
Avoid selling your business the short and sacrificing services that you need because you are desperate for high risk processing services.
An ideal provider should offer the following services: POS systems, mobile payment solutions, credit card terminals, payment gateways and integrations for your high risk niche.
Furthermore, the sales staff and customer service representatives should be experienced and well-trained in handling high risk accounts.
Contracts: In the high-risk industry, there is a trend of locking merchants into a standard three-year contract.
Most of these long-term contracts come with an auto renewal and early termination fee that some providers do not bother to reveal.
You have no idea what your business might need in the next three years, so go for a shorter term contract if at all possible.
Ask direct questions about the length of your contract and ensure that you read the terms thoroughly and do not skim through the pages.
All high-risk businesses require flexibility, so ideally you should be looking at a contract that allows you to adapt when the volatile landscape changes.
Pricing: Account fees, processing percentage rates and some of the other costs linked to operating a high risk merchant account.
While account fees are billed on a monthly or daily basis, processing fees accrue on a per-transaction basis.
With regards to processing percentage rates, merchants should always choose providers that offer interchange plus pricing plans over tiered pricing plans. Tiered pricing plans may look simple but are very expensive in the long run, especially when processing high volumes of transactions.
SecureGlobalPay’s interchange-plus pricing model is based on the buyrate associated with the particular bank card used for the transaction. We access a fixed margin to process the payment and provide transparent reporting to show you the true costs associated with your payment processing. Other third-party processors opt for fixed fees, never disclosing the specific type of card used and the buyrate or cost associated with a particular transaction. Merchants accepting mostly debit cards with low buyrates are particularly paying more than they should under these fixed, tiered pricing models.
Interchange plus saves merchants a lot of money in processing fees which is not profitable for all payment processors and merchant aggregators.
This is why most retail processors refrain from offering anything close to interchange-plus pricing.
However, there are some high-risk merchant processing companies that offer this pricing plan. High Risk merchants are initially expected to pay higher-fees than non-risk merchants. Occasionally, rolling reserves are required for approval due to high chargeback ratios. Once a solid relationship has been established with some good processing history, the processing fees can usually be re-negotiated and the reserves can be reduced or even be released entirely.
You should also have all your paperwork in order because it is difficult to get approved.
Value Service: Providing customer support around the clock either by phone or email can be problematic for some merchant account providers.
Ensure that you go all out and choose a payment processing provider that places plenty of value in service. This alone is irreplaceable. Having an account representative that responds in a timely manner to your emails and always takes your calls is of utmost importance.
This includes providing 24/7 support and troubleshooting services.
The right high-risk merchant processing provider should have self-help resources on their website detailing how their services work with detailed answers to frequently asked questions.
This helps merchants sort out simpler issues on their own, while the support staff deal with more complicated problems.
You can always get a better understanding of whether a provider considers value-based customer service a priority by checking out their Better Business Bureau reviews.
The appropriate high-risk merchant account provider understands different business types and business models.
Never proffer a one-size-fits-all approach towards high-risk merchant account card payment processing.
Choose a payment solution that is dynamic and hand-tailored to your business specifications. Settle for a payment process that simplifies the buying process for your customers.
Never take a shortcut or misrepresent yourself because you are struggling to open a high risk merchant account
The last thing you ever want to do is end up in the Terminated Merchant File. The TMF list is a business killer and removing yourself from here can be a nightmare if even possible. Not properly managing your high chargeback ratios is one of the fastest ways to end up on this list.
Conclusion – High-Risk Merchant Processing
Traditional payment processors may not want to work with you, but there are companies offering reputable services that will gladly do business with you.
Do your research, weigh your options and scrutinize the terms of the agreement before signing.
High risk payment processing may be expensive, but it does not mean you have to get ripped off in the process.
Moreover, the benefits of accepting card payments for your high-risk business far outweigh any costs you might incur once you find the appropriate high-risk merchant processing provider.
Secure Global Pay has a solid track record of working with high-risk merchants and offers a plethora of high-risk merchant processing solutions for the majority of high-risk business types. We provide a robust API which includes chargeback reduction tools, intelligent transaction routing for high chargeback ratios, multiple MID payment processing for diversification and a Virtual Terminal with mobile SDK’s for most smartphones and tablets. SecureGlobalPay, processing solutions that make sense!
