If you're launching your first online store or expanding an already successful e-commerce operation, you may come across the terrifying term "high-risk merchant account."
These are the companies that banks, payment processors, and card networks label as being concerned about.
The phrase "high-risk" is a frustrating misnomer in the payments industry since it's used for companies that aren't dangerous but happen to provide products that underwriting banks feel strongly about.
But, no need to worry because today, most high-risk businesses are booming, and somewhere its credit goes to a suitable high-risk merchant account and high-risk payment gateway.
High risk does not mean low sales or low profits. You can still gain your customer's trust and grow your business.
This blog will help you to understand why some businesses are considered high-risk and what to do to obtain a high-risk merchant account. So, let's start.
What Makes a Businesses High-risk?
Which elements are risky are not determined by a single framework or central body in the payments sector. Each payment service provider, bank, and payment processor instead creates its criteria.
While other businesses accept applications from all applicants, some explicitly indicate that they don't work with particular industries. The types of companies that payment service providers accept are more restricted than those that provide merchant accounts. In either scenario, you must apply with information about your company.
Ultimately, your service provider will decide on each application based on internal criteria. Some of the risky factors, generally, service provider consider includes are -
Some Industries are Considered High-risk -
Some Other Risk Factors are -
- Illegal activities and past fraud.
- Bad credit score.
- New businesses
- Large card, not present transactions
- Global sales
- High-sales volume
- High-transaction size
- Accept subscription-based payments
- Being on the MATCH list – It is a list managed by MasterCard. Its key responsibility is to monitor the merchant behaviours like chargeback history etc.
How do High-risk Merchant Accounts Different From Low-risk Merchant Accounts?
Let's have a look at the main difference between a high-risk merchant account and a low-risk merchant account.
Tips to Get the High-risk Merchant Account -
Once you know that your business is high-risk, obtaining a high-risk merchant account is challenging. But you can still get the best solution for your high-risk enterprises. Here, we will discuss some tips that will help you increase your chance of getting a high-risk merchant account. Let's start -
- Honestly: Always be honest with your service provider. Try to disclose as little information about your businesses as possible. Transparency and communication will help you to get your merchant account.
- High-cash level: Bank and financial service providers also check the financial stability. So, the merchant needs to have 25% to 50% of their account's monthly card transaction volume.
- Prepare with all the essential documents: Be prepared with all the necessary documents. Each service provider has their criteria. So, before applying for the merchant account, be ready with the documents. Almost every service provider asks you to submit at least three to six months of bank statements. Some service providers also ask for a few years of tax returns.
- Determine which factors are within your power to influence: You may not be able to influence whether payment providers view your industry as high risk. Still, you may be able to improve your credit score or reduce chargebacks if those factors are relevant to your scenario. Ask your payment provider if there are any steps you can take to lower your risk; you might be able to get better rates if you do.
- Clear communication with customers: Not every chargeback is malicious. Some are the outcome of dissatisfied customers. Merchants can decrease these types of a chargeback by taking some action. Is your refund policy and shipping policy clear to understand and prominently displayed? Can clients readily contact you if they wish to address a problem directly?
How to Obtain a High-risk Merchant Account Provider?
Today, you can get many service provider that offers high-risk merchant account but choosing one among the thousands is challenging for any merchant. As a high-risk merchant, you have to do lots of research to get a suitable service provider. Before making the final decision, we recommend you ask your service provider the following queries.
- How many years of experience does the payment processor have in your field?
- What types of support do they offer you to support your businesses?
- How much time do they need to access your funds?
- Can the conditions of your agreement alter in certain situations? For instance, you might see higher fees if chargebacks exceed a specific threshold. It also applies reverse: Some payment processors may lower your fees if you reach a specific level.
If your service provider offers you a satisfactory answer to the above query, you can hassle-free go with that particular service provider. In case you are not satisfied, look for some other service provider.
Which Service Provider is Best for the High-risk Merchant Account?
Still, if you are struggling while finding the best fit for your high-risk businesses, then you can go with our recommended service provider, i.e. "PayCly." PayCly is one of the most popular payment service providers specializing in dealing with high-risk businesses.
It is an all-in-one shop. It means merchants can get the high-risk merchant account, high-risk gateway, and credit card processing in one place. We, as "PayCly," have a contract with many acquiring banks and financial service providers, so with us, your merchant account can get approved within three to seven working days with all the proper documents.
With our futuristic security tools and multiple payment options, the merchant can hassle-free expand their businesses at the global level. We offer all the possible solutions for the merchant, so they must focus on their business growth.
Final Thoughts -
Today, most businesses are high-risk due to many factors but are booming. The definition of high-risk varies from one service provider to another. More important, obtaining a high-risk merchant account is difficult but not impossible. Above, we have discussed some tips to help you get a merchant account.
By choosing a service provider like PayCly, you can set up your high-risk merchant account. PayCly has experience dealing with high-risk industries, so it completely understands what is best for your businesses and offers you the same.
Feel free to contact us through mail - [email protected] or directly drop your query here - https://paycly.com/apply-now.php any time to know more about our services.
Looking for a high-risk gateway for instant approval we help you to accept credit card payments online with fraud protection.
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