Risks are calculated differently by each merchant processing company. Different criteria will play a significant role in classifying your company as high-risk.
The risk is generally calculated in terms of fraud and chargeback’s. More chargeback’s imply a higher risk.
High-risk credit card processing is the same as fraud and chargeback’s on a business transaction. As previously stated, each merchant processing company will have a unique approach to dealing with high-risk merchants. The business that process a large transaction or exceed your monthly limit, your merchant account will be labelled as high-risk. If any batch out exceeds a certain amount in a single day, it will be manually checked and move to high-risk category.
What exactly is a High-Risk Merchant?
A company may be labelled as a high-risk merchant for a variety of reasons. This designation is usually given if your company has a high rate of chargebacks, is prone to fraud, has a low credit score, or is located in a high-risk area.
The greater the risk, the more difficult it will be to locate a traditional bank or payment processing service provider; however, many vendors specialise in serving high-risk businesses.
Methodology
We considered the following rating factors when selecting vendors who are the best fit for high-risk merchants:
High-risk merchants are a specialty– Businesses in high-risk industries will have different requirements than most. As a result, we were specifically looking for service providers who serve these merchants.
Pricing– Many customers value a clear fee structure. Companies that provide this information up front were rated higher than those that require contacting a representative.
Features– Different companies will have different requirements. Companies that offer a variety of options to meet those needs received higher ratings. A reporting dashboard, invoicing, data exports, contactless payments, chargeback monitoring, fast deposits, and offshore account support were among the features we sought.
Reputation– We looked at customer and third-party reviewer feedback and recognition to see what actual users thought of the services. Companies were graded based on both their average rating and the number of reviews they received.
Customer Service– When things go wrong, having dependable, accessible help is critical. Companies that have multiple channels of communication available were rated higher than those that only have a few.
If you fall into the high-risk category, keep the following factors in mind.
- Monthly Commercial Banking Balance
- The Credit Score of Your Company
- Processing History of Your Company
- Recurring Billing- If your company allows recurring billing, you must expect high chargebacks.
- Your Business and Transaction Method
- The Reason for the Increase
In most cases, the merchant has a high number of chargebacks, which has landed them in a high-risk merchant account.
For example, if your company has a minimum sales volume, negotiate higher processing rates in exchange for a lower account fee. If you have a high volume of sales, you can negotiate lower processing rates in exchange for a higher account fee. This way, you can ensure that your company is set up for success from the start, as it is much more difficult to re-settle later on.
Another option for lowering your processing costs is to request an interchange-plus pricing plan. Interchange-plus rates are more difficult, but they are also lower than the far more common tiered rates. Unfortunately, obtaining an interchange-plus rate from a merchant account provider can be difficult. However, it is still worth a shot.
Benefits of High-Risk Merchant Account Instant Approval
Even though being rejected by a merchant bank and placed in the high-risk category may appear to be a disaster at first, it isn’t. If you ask a high risk merchant account provider, they will tell you that it has a lot of advantages. Among them are the following:
Possibility of global expansion – Unlike traditional merchant accounts, which are limited to transactions only in the parent country, high-risk merchant accounts have no restrictions and can transact money in any currency, giving them the real possibility of globalizing their business.
Absence of volume caps – Common in traditional merchant accounts; high-risk merchants do not have to worry about a monthly target volume, allowing them to transact as much as they want.
Lower risk of account termination – If a traditional merchant receives a significant number of chargebacks (more than 1%), their account may be terminated; this is not the case with high-risk merchant accounts because the providers are aware that it is possible, so they are safe, and their account will not be terminated due to high chargeback’s.
Selecting a High-Risk Account Service Provider
Keep the following concerns in mind as you search for the best service provider:
Who is the vendor willing to work with? Even high-risk merchant account providers do not accept all businesses. If you’re an offshore company, have bad credit, or run a high-risk business, look for vendors who understand your unique situation.
Fee increases– Vendors typically charge higher fees to balance their risk in serving your business than low-risk merchants would.
Your credit score is important– A business owner’s or a company’s low credit score may affect the likelihood of approval for a merchant account. If you’re being turned down for merchant accounts, you may need to improve your credit score.
Summary
A merchant account is a service that allows merchants to accept payment via credit and debit cards. It is provided either directly or through a third party by a processing bank that is a member of Visa and MasterCard.
Starting an e-commerce business is a difficult task. But it is far less difficult today than it was just a few years ago. Whether you choose an e-commerce merchant account provider or not. Selecting the right provider is a critical step in getting your business up and running.
E-commerce Payment service providers such as PayCly are a better option for high risk merchant account instant approval account.
Because payment service providers do not charge monthly fees or require long-term contracts, switching to a reliable merchant account is simple once your company reaches this threshold.
