7 Things You Should Know About Having a High Risk Merchant Account

Sep 20, 2019

The High Risk Merchant Account: The Good, The Bad, and The Downright Ugly.

High risk merchant accounts can be fraught with complexities and difficulties. It is crucial that you are fully informed of its trappings and unscrupulous practices before you sign your contract.

To help you, here are 7 things you need to know before you apply for a High Risk Merchant Account.

  1. Be Aware of Longer Contracts

Payment processors typically lure you into longer than normal contracts (usually 3 years) to lock you in at a certain rate, one that only benefits them.

  1. Brace Yourself for Tiered Pricing

Here your payment processor charges you various fees per transaction. The processor also determines the riskiness of the purchase, thereby charging a higher rate.

  1. Look Out for the Automatic Renewal Clause

This clause allows for an automatic renewal of your contract to take place after the initial contract term expires (normally 3 years). The renewal not only applies to the contract but the early termination fee as well.

  1. Expect Early Termination Fees

If you choose to bow out of your contract before the expiration date, you will pay an early termination fee. This fee will be a pre-negotiated rate as stated in your contract.

  1. Prepare for the Liquidated Damages Clause

This is a type of “early termination fee” in which the provider has free reign to collect thousands of dollars in “damages” from the anticipated revenue loss due to your early cancellation.

  1. Watch Out for Account Freezes

If your provider perceives that transactions could potentially become chargebacks, it might take all of the funds out of your account and hold them for at least 90 days and sometimes up to 180 days.

  1. Beware of Chargeback Fees

In the event of a chargeback, the processor will hit you with a fee that is typically higher than that of a low-risk merchant.

Regardless of the formidable consequences that loom around the corner, there is hope. Fortunately, the payment processing landscape is changing, and more companies are catering to the growing high risk market, offering better rates, honest practices, and more reasonable fee structures.

Ultimately, you hold the power to research these companies thoroughly. Ask for references and referrals from your fellow business owners. Read all your contracts carefully and completely. The more information you arm yourself with, the less probability of finding yourself with an unsavory and potentially costly payment processing agreement.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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