High-Risk Merchant Accounts: A Saviour of High-Risk Businesses

by Martina Smith Payment service

Do you know two out of three businesses are considered high-risk? You may have many questions in your consciousness, like who labels businesses low-risk or high-risk and why they are categorised as such. And what leads them to fall into these categories. In this blog post, we will uncover the ins and outs of high-risk businesses and the role of a high risk merchant account in saving them from potential fraud. Let's start:

 

An Outline of High-Risk Businesses

Let's start finding the answers to potential questions. Banks and financial institutions are the entities that categorised businesses as low-risk or high-risk. To understand the reason, we have created a list of why a business is classified as high-risk:

•      If a business belongs to the industries such as online gaming, casino, poker, gambling, forex, adult entertainment, IPTV, debt collection, tobacco, e-cigarettes, travel, etc., it is considered high-risk.

•      The increased risk of fraud and chargebacks in business is another reason.

•      The location of a business is also a reason to be risky.

•      If a business has a high-volume transaction, it's considered high-risk.

•      Similarly, if a business has a larger number of transactions, it's also considered risky.

•      If a business wants to accept payment in multiple currencies and alternative payment methods, it'll be categorised as risky.

•      The reputation of business or the nature of business.

•      Insufficient rules and regulations for the operation of businesses.

Other than these, particular banks and FIs can also determine their own set of rules to classify businesses as risky.

Why High-Risk Merchant Accounts Are Important?

The straightforward answer is that they enable high-risk merchants to accept customer payment for selling their goods and services. High-risk merchant accounts are similar to bank or financial accounts, with enhanced security, fraud prevention mechanisms, and other advanced features that streamline payment transactions.

Let's glimpse some states that will help you understand the importance of high-risk merchant accounts.

•      According to an article published in Forbes, online scams are rising steadily, reporting an 87% jump between 2015 and 2022.

•      As per the Association of Certified Fraud Examiners (ACFE), nearly 50% of small businesses experience fraud at some point throughout their lifespan.

•      As per the PwC Pulse Survey: Managing Business Risks 2022, Around 40% of businesses consider cyber risk to be their most severe risk. Another 38% rated cyber fraud as moderate.

•      A report from the Association of Certified Fraud Examiners (ACFE) cited that businesses lose around 5% of their annual earnings to fraud.

•      A Juniper Research analysis also revealed that online payment theft costs companies up to $48 billion a year and will rise to $343 billion annually by 2027, with high-risk enterprises being the most negatively impacted.

Numerous reports are available on fraud in digital marketplaces, but here we cited only a few significant of them to inform you of fraud in online businesses.

A traditional merchant account can’t beat these fraudulent activities, but a high-risk one can. High-risk merchant accounts are crafted to eliminate potential fraud in online transactions. They can save merchants from monetary loss and reputational damage by providing specialized services, such as robust fraud prevention tools, advanced chargeback protection, and high-volume processing capabilities. By offering such protection, they facilitate safe, secure, and smooth payment processing for high-risk businesses and mark their importance in online business regimes.

What Features Do High-Risk Merchant Accounts Contain?

(1)          Secure Payment Processing

A high risk payment processing provider secures payment processing by employing advanced fraud prevention tools, such as encryption, tokenization, address verification system (AVS), card verification value (CVV), 3D secure authentication, fraud scoring, and geographical tracking. Furthermore, they comply with industry standards like SSL, PCI-DSS, and GDPR to secure sensitive payment information. They also employ advanced AI-based chargeback prevention tools and risk management systems so that fraudsters can't harm you and your customers.

(2)          Global Payment Acceptance

A high-risk international merchant account provider knows that 30% of customers have abundant carts if they do not find their preferred payment method or currency. To increase your sales, they provide a range of currencies and alternative payment methods and help you grow internationally. This feature also helps you build your customer base and increase the chances of repeated sales.

(3)          Tailored Merchant Accounts

High-risk payment solution providers understand the unique requirements of every high-risk business and offer them customized solutions. They created special featured accounts, such as forex merchant accounts, adult toys merchant accounts, online casino merchant accounts, etc., for particular high-risk industry needs. Furthermore, with their white-label solution, you can even put your brand logo and theme on the payment gateway checkout page to build customer trust. Increased trust is directly proportional to increased sales, further equal to the boosted revenue.

(4)          Reliable Customer Support

A high-risk payment gateway provider is well aware of the free time zone in high-risk businesses. That's why they usually offer 24*7 dedicated customer support in multiple languages to solve the issues you may face.

(5)          Additional Features

Besides these, high-risk processors provide several other benefits, such as:

•      They offer a pricing structure according to the facilities you utilize.

•      They help you build your reputation and instill customer trust.

•      High-risk merchant service providers allow merchants to accept large numbers of transactions as well as high-volume transactions.

•      They provide a powerful dashboard to track or monitor real-time transactions and download detailed analysis reports. These features help you make informed decisions.

•      Moreover, high-risk payment solution providers always look forward to introducing new and futuristic features into their solutions.

 

Conclusion

In this blog, we have seen the many aspects of high-risk businesses. Also, we learned why acquiring a high-risk international merchant account is crucial for a high-risk business owner. Moreover, we uncovered the features of a high-risk account and provided insights that will help you make an informed decision. After taking all the aspects into account, it is visible that a high-risk merchant account is not a choice but a necessity in this online regime for high-risk businesses. If you are a high-risk merchant, we suggest you carefully acquire a full-stack high-risk payment processing provider that can customize its services according to your need and streamline your payment processing system.

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Created on Jul 25th 2023 00:01. Viewed 256 times.

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