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High-Risk Merchant Processing: What Makes a Business High Risk?

High-risk merchant processing: Today we will be covering the key distinctions of what may classify your business as high-risk in banking and merchant services. By the end, you’ll have the knowledge needed to identify your business’s risk level and be successful in a high-risk industry.

When it is approved for merchant accounts, being classified as a high-risk merchant. Knowing if your business industry type is considered high risk can narrow your search for a quality merchant service provider and prevent a vicious cycle of application declines and seeking new providers.

Banks use these factors to assess your business’s risk for credit card processing.

High-risk merchant processing: They look at what you sell and the potential for fraud chargebacks, large transaction sizes, and long-term deliveries. That can open up a business to potential account losses. Businesses may also be classified as high risk because of selling products that are on the fringe of being illegal. Blacklisted because of fraud or bankruptcy, delayed delivery from time of purchase. Business owners have bad credit, not registered with local regulatory agencies. Businesses structured around trial offers or free offers and infrequent processing.

Even if your business has a spotless record, many banks judge risk based on the actions of other companies and their industry.

Getting approvals for a merchant account is usually a straightforward task for non-high-risk merchants, with rates, fees, and features being the main concern. However, high-risk merchants have to hunt for a provider connected with a bank that accepts their industry type. This may sound simple enough, but merchant service providers often claim they can handle certain high-risk accounts even if they can’t. This can save up to a month of your time waiting for a decline and result in a hit against your credit report with nothing to show for it in the end. Okay, so you finally find a proper provider that takes your business title as a high-risk merchant.

There can be some conditions or limitations for your account’s approval. Such as fixed lower processing limits or reserves withheld on transactions, limited processing options or gateways, and higher processing rates. Now, these limitations should not be a deciding factor as to whether or not you should get a merchant account. Since not accepting credit cards is often a worse scenario to be in. Instead, these are essential items that you, as a merchant. need to be knowledgeable about when you are looking for the best high-risk merchant account provider. Understanding all the different aspects of high-risk merchant services will help you find the best processor.

 If you want to get more information about how to approve a high-risk merchant account, contact us at 1-888-253-9692.

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