The world has embraced the digital era, swayed by the numerous benefits of modern technology and the one benefit that was certain to appeal to every generation: speed. With the ability to conduct any transaction or operation online with the click of a few buttons, the virtual space has evolved into the global common room, where any person or service can be contacted in seconds. In today’s business world, most businesses require the capacity to process credit cards. Finding the correct merchant account provider is difficult for any company, but it’s considerably more difficult if you’re a high-risk organization. High risk payments and merchant accounts are helpful in this situation.
For those who are unfamiliar, this sort of account is employed as a payment processing service by what banks consider to be hazardous enterprises. A long history of fraudulent behavior, financial instability, a negative credit rating, and a high incidence of chargebacks are all reasons why a company could be considered dangerous. Due to the risk concerns previously indicated, these firms are expected to pay significantly higher costs and are subject to much greater scrutiny when seeking to get specific services as a result of being classified as high risk.
A high-risk merchant account is for firms with a high risk of fraud and chargebacks from their processor. The type of the business, the owner’s credit and business history, and other variables may be used to determine this. Because each processor defines what constitutes a high-risk business, a firm may be considered high-risk by one processor but not by another.
The United States appears to be the most hit by credit card theft, according to many experts, who blame the regrettable scenario on a failure to adapt to safe preventive tactics. The EMV system, for example, has been painfully slow to deploy, although it has resulted in a 70% reduction in counterfeit fraud in the United Kingdom and other countries.
The travel industry is an example of a high-risk company, as there are several causes that might cause cancellations. This frequently results in a large number of refunds and chargebacks from customers. Gambling, currency trading, and adult-themed websites are just a few examples.
When it comes to costs, the unpleasant reality is that high-risk merchant accounts are more expensive than low-risk merchant accounts. You must expect to spend more on processing fees and account fees since costs are unavoidable. However, you should be aware that high costs for high-risk merchant accounts were formerly the norm, and you can now locate payment processors that provide affordable rates customized to your business. Stick to the outdated strategy with a 15% commission rate or possibly higher costs. You don’t have to be locked into three- to five-year contracts. The same may be said for additional charges.
When determining whether or not a firm is a high risk, financial institutions and banks will consider a variety of factors. The following are some of the criteria that are taken into account:
- Creditworthiness: The creditworthiness of the owners and directors is vital to examine, albeit poor creditworthiness might be mitigated by personal guarantees.
- Year of trading: The lower the number of years a company has been in operation, the higher the risk it is considered to be. Businesses that have been in operation for a long time are more likely to be considered safe.
- Income channel: This evaluates whether the company’s revenue is generated by pay-on-delivery or subscriptions. It also considers the time it takes for goods or services to be provided once payment has been received.
There are a lot of high-risk credit card processors out there, so do your homework before deciding on a payment partner. There are many elements to consider before making a final decision, including the following:
- Flexibility and customization: When you operate a complicated company model, look for a high-risk processor that allows you to design numerous payment scenarios that cater to all of your business demands. Make sure you can personalize every aspect of the payment form and talk about the prices, terms, and features that are exclusive to your company.
- Security indicators: As a high-risk merchant, you require a payment partner who adheres to tight security guidelines and offers a suite of anti-fraud technologies to keep your business safe from scammers. Check to see whether they have a good chargeback prevention system and a tiered security strategy.
- Technology: You might be curious if the payment gateway you’re considering offers numerous accounts. Furthermore, request the APIs for the payment platform so that you have complete control over the setup and payment process. It’s also important to have a quick onboarding process and payments that are tailored to the user’s needs, with no downtime or surprises. Payment processors using outdated technology and a lack of expertise should be avoided.
- Responsive support: You need someone on standby to assist you if something goes wrong with payments on your website or in your app. Ensure that your high-risk firm has a credit card payment provider that guarantees that all issues will be resolved.
When applying for a high-risk merchant account, keep in mind that the restrictions may be more stringent than those of a standard merchant account, so read your contract carefully. Examine any hidden or additional fees, charges, and the size of the rolling reserve.
Finding a trustworthy high-risk card payment processor might be difficult, but you’ll be shocked how much easier your company procedures will become once you have one. Working with a payment processor who knows the high-risk industry will help you improve your reputation while also ensuring the security of your assets. The danger of fraud increases as your sales increase. As a result, you need to ensure that your payment processing system is safeguarded by sophisticated security solutions that keep fraudsters away.