Your Guide to High-Risk Merchant Account Processing Solutions in 2020

Any business hoping to grow and thrive in today’s competitive marketplace needs to have a merchant account: a payment processing framework to facilitate online transactions. For traditional companies, the process of securing a merchant account from a processor or a bank might sound like a piece of cake. Unfortunately, this is not the case for high-risk businesses. Businesses that are deemed “high-risk” by acquiring banks may find the process challenging. If you were to search for a merchant account for your high-risk business, most financial institutions would most definitely decline your request, even if you have a proven history of running a clean company.

Which types of businesses are labeled high-risk?

Businesses are usually considered to be high-risk because their respective industries have gained a bad rep with acquiring banks or because they are often vulnerable to high chargeback ratios or scams. Some of the industries that are identified as high-risk may include online pharmacies, casinos, and poker sites, travel services, inbound telemarketing, and cryptocurrency.

How to apply for and acquire a merchant account?

Since most banks and payment processors are unwilling to provide merchant accounts to high-risk businesses, you must partner with a merchant account provider with decades of experience specializing in high-risk payment processing. You would then need to compile all relevant supporting documentation and submit them to the merchant account provider. At this point, your high-risk specialist will determine which acquiring banks are suitable for your business. Once the bank has approved you, your high-risk merchant account will be set up, and you can start accepting credit or debit card payments through your new payment terminal.

Important: When you contact a merchant account provider, your first consideration should be whether they serve businesses that are identified as high-risk. Be careful, though, as sales reps often say that they provide high-risk processing services, only for you to find at a later stage that their underwriter does not want to work with you.

Tips for completing a successful merchant account application

Each payment processor has an underwriter whose job is to assess the degree of risk associated with partnering with a high-risk business. This prevents the payment processor from suffering losses on a single account due to uncollected chargebacks and fees or regulatory penalties.

The underwriter has to evaluate whether your business will be stretched thin and whether you will be paying all fees and other amounts owed to the payment processor every month. The underwriter also monitors the regulatory end of the scale, which means that they determine if the credit card processor is exposing itself to hefty fines from the government or the acquiring bank for allowing payments from merchants who engage in illegal or fraudulent practices.

It is, therefore, a smart idea for you to hold large deposits of money in your business’ banking account and act as though you have a reliable, well-planned business model. Also, the management of your business should prove to be capable and stable to have the application accepted by the underwriter.

Wrapping this up

If the prospect of being branded a high-risk business because of higher possibilities of friendly fraud or the nature of your services keeps you up at night, know that high-risk specialists can help - whether you want a pharmacy merchant account or a  payment processing solution for your online casino. Being considered a high-risk business is not all doom and gloom; with the right processor, you can push your business growth and generate more sales.

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Created on May 11th 2020 07:44. Viewed 380 times.

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