Are you a Hard to Place Merchant? Who could have guessed that when you furnish your home you are most likely dealing with a business in a higher risk industry? Yes indeed – Interior Decorating and Furniture Sales Merchants are both considered Higher Risk Merchants by payment processors.
Find out if your business type fits into this high-risk merchant account list and let the professionals at SecureGlobalPay assist you every step of the way.
The terms, “Hard to Place Merchant” and “Higher Risk Merchants” comes from the viewpoint of a credit card payment processor or acquiring bank. They look at many factors, including the ticket size of a typical sales transaction. If your business sells expensive, high ticket items then you are most likely in the high risk category.
Identifying and eliminating risks that are related to potential loss, is at the heart of the underwriter’s role, especially when it comes to, Hard to Place Merchants.
They look very carefully at every application for a merchant account. Simply put, if the industry your business operates in is considered a high risk of creating potential losses for the card processing company, the application will be declined.
This is where specialists in High Risk & Hard to Place Merchants come into their own to help you navigate through this process.
The Reason Why Banks Steer Clear of High Risk Businesses
Where’s the risk in processing card payments, you might ask? Don’t they take a chunk of every transaction as well as charge other fees? How can they possibly lose money? What merchants are considered Higher Risk Merchants?
The answer lies in scenarios where things go wrong. With high risk businesses, fraud is the biggest problem because it can mean that the bank or card processor may be left carrying the overall burden and financial hit associated with the transaction if the merchant cannot cover the loss.
In this guide, we examine some of the common causes of fraud. We also look at what a business owner should do if the industry it operates in is considered High Risk. High Risk Merchants, looking for approvals on a hard to place merchant accounts turn to SecureGlobalPay as their payments processor.
List of High Risk Business Industries Considered Unsafe By Credit Card Processing Services
Here is a list of Higher Risk Merchants. These are the high risk business industries that credit card processors try to avoid because of excessive fraud and high chargeback ratios.
- Advertising services
- Affiliate marketing
- Airline, lodging, travel
- Auto sales
- Auto warranties
- Background checks
- Beauty, skin & hair care
- Business opportunities
- CBD Oil
- Coins and collectables (antiques)
- Computer sales
- Credit repair and monitoring
- Dating app merchant payments
- Debt collection and debt management
- Domain registration
- Drugs and drug products (including prescriptions)
- Events and Tickets
- Fantasy sports
- File sharing
- Firearm sales
- Foreign exchange (Forex)
- Furniture sales
- Government grants
- High ticket coaching merchant account
- ISPs and web hosting
- Male enhancement
- Merchant Aggregators
- Money Transfer
- Monthly membership
- Moving services
- Nutritional supplements (nutraceuticals)
- Merchant processing for online auctions
- Pawn shops
- Pet sales and accessories
- Payday loans
- Penny auctions
- Phone unlocking services
- Prepaid phone cards
- Pyramid selling, network marketing, direct sales
- Software and apps
- Software downloads
- Subscription Boxes
- Tech support
- Ticket brokers
- Timeshares and holiday clubs
- High-risk tobacco merchant processing
- Vape / E-Cig
- VPN services
- Web design card payments design and SEO services
High Risk Business: 12 Qualities of High Risk Merchant Accounts
A high-risk business merchant account is seen by payment processors as more vulnerable to fraud and chargebacks.
Funds from card transactions are deposited in hard-to-place merchant accounts after they are processed and eventually transferred to business bank accounts.
Here are 12 qualities of Higher Risk Merchants:
- Operates in an industry that is considered high risk for merchant accounts (see our list above)
- High ratio of chargebacks (e.g. over 2%)
- Big-ticket transactions (e.g. over $500)
- High volume merchant processing transactions (e.g. over $100k per month)
- Recurring billing, such as monthly membership subscription
- Seasonal sales fluctuations
- CNP transactions (Cardholder/Card Not Present) such as online sales
- International sales
- Accepting foreign currency sales
- Operates in a country that has a high risk of fraud, high use of stolen credit cards or poor Internet security
- Card processing history is inadequate or non-existent
- Poor or no credit history
How Fraud is Perpetrated on High-Risk Merchants and Card Processors?
It’s a very good idea to familiarize yourself with how crooks work the system. This should be a no-brainer when it comes to defending your business and protecting your high-risk or hard-to-place merchant account.
Criminals and con-men constantly hatch new methods but there are a number of recognized frauds and some red flag warnings that you should watch out for.
Fraudulent chargebacks – the most common fraud of them all, often perpetrated by “ordinary” consumers trying to pull a fast one. Customers attempt to get away without paying for the goods or services they received by disputing the transaction in some form, eventually initiating a chargeback with the card issuer
Stolen credit cards – the method preferred by criminals. If undetected, goods are shipped in good faith by the merchant, and only later is the payment reversed by the payment service provider once the fraud has been detected.
- A good high-risk card processing company will deploy rigorous fraud detection methods, which are often triggered by scenarios such as these:
- The same IP address used for multiple different credit card transactions
- Multiple purchases right after another using the same credit card
- Multiple purchases from the same address with different credit cards
- Multiple purchases using the same card but different addresses
- Above-average high transaction values
- False address details or other inconsistencies
- Unusual shipping addresses, often to foreign countries
- Unusual urgent orders
Why are Chargebacks Such a Hot Topic With Banks and Card Processing Companies?
To understand why a high ratio of chargebacks can cause your merchant account to be terminated, it’s good to understand the concept of Higher Risk Merchants in general.
Under credit card regulations, consumers are protected in a number of ways. One of these is that they may immediately dispute the charge, say if an order has not been received as described or they feel they have been taken advantage of in some way.
In an ideal world, the customer would deal directly with the merchant. Between them, they would reach an amicable and satisfactory resolution to the issue. Instead, some people just initiate a chargeback with the card issuer and the merchant is the last one to know about it.
That means the credit card processing company is obliged to do a review and possibly issue the refund as needed. In the normal course of events, that would be charged to the merchant and the card company would be all square.
The problem is that the merchant may have gone out of business, closed their bank account for example, or for some other reason, the credit card processor and payment service provider is unable to get its money back. Then it’s at a loss.
Also, processing chargebacks is labor-intensive. Staff must handle the chargeback and deal with it, then negotiate it with the merchant who will not be happy. It takes time to handle all these kinds of irregularities and time really is money when you have to hire staff to do all that.
When a business is seeing a chargeback ratio in excess of 2% of their transactions, alarm bells should ring. The card processor or payment service provider may decide the risk is too great and pull the plug.
When Looking for a List of High-Risk Merchant Account Providers
As you can see from our list above of “risky” industries, a large number of totally legitimate and otherwise innocent businesses may be declined by many card processing services and payment service providers.
This is no cause for concern because there is a growing list of high-risk merchant processors who specialize in High-Risk Merchants industries. No one provider works across all industries. This is actually a good thing. It means that providers get to thoroughly understand a selected list of industries. They appreciate the hazards that these businesses face and are happy to deal with them.
The key is to use the services of experts in this field. Companies such as us at SecureGlobalPay have built up a network of acquiring banks and card payment processors who cater to the high-risk sector.
It means that we can match your high-risk merchant account application with a provider who is very likely to treat it favorably.
Getting Started: A List of High-Risk Business Merchant Account Considerations
Here is a list of high-risk business merchant accounts to consider for hitch-free services:
- Customization and flexibility
- Cutting edge technology
- Top-tier security
- Experience and expertise
- Great customer service
Compiling a List of High-Risk Industries Merchant Account Providers?
There is really no need to painstakingly compile a list of high-risk industries merchant account providers, take a chance with one and hope everything works out in your favor.
We have decades of experience and a tailor-made solution prepped and ready for your business to use right now.
Complete the below-referenced application and we will give you a status update in 1-3 days.
Alternatively, talk with one of our payment processing experts on 1-800-419-1772 who will be happy to answer all your questions and guide you along the right path towards approval for your high-risk business.