Applying for a High Risk Merchant Account? Read This

May 13, 2020

High risk merchant accounts are vital to accepting credit card payments for your business.

If you are an eCommerce business owner, your only way of getting paid is to accept debit and credit card payments. As you grow, your best move would be to acquire a comprehensive or “full service” merchant account. However, before you dive into a grand virtual search for the perfect merchant account provider, you must familiarize yourself with the payment providers’ lay of the land.

First of all, the unfortunate truth is that not all merchants are created equal. If you happen to be a “high-volume”, low risk merchant, the perks you will enjoy include much lower processing rates, fees, as well as fair and decent contract terms. Conversely, if you happen to fall into the high risk category, your fees will be nothing short of exorbitant and contract terms…abusive.

In order to begin the journey of finding the perfect merchant account provider, let’s familiarize ourselves with high risk merchant accounts.

What Is A High Risk Merchant Account?

Initially, when you apply for a merchant account, you will be required to submit both tax and business information as well as undergo a credit check. During the underwriting process, if anything in your application tips off the payment processor that you are a high risk merchant, one of two things will happen. One, you will be refused a merchant account outright. Or two, you will be granted a merchant account, but with excessively high rates and fees. 

But how do these merchant account providers determine if you are a high risk merchant?

The simple answer is that every processor follows different guidelines and standards of what they consider to be high risk. This works in your favor since one provider may deem you high risk while another does not.

As mentioned, every processor has its own guidelines to determine whether or not a business is high risk, however, there are some standards that are generally used to identify high risk businesses. Here are some of the main characteristics:

  • Poor Personal Credit Score: This is a red flag for a payment processor. If you demonstrate a bad credit score, it communicates to the payment processor that you are not adept in managing your finances and could even be vulnerable to fraud.
  • Poor Merchant Account History: If your past experience with other merchant account providers is riddled with chargebacks or fraud, this will also negatively impact your application. 
  • Where Your Business Is Located: Say for example, you are a business owner based in the UK, but your customers are mostly in the US, this positions you as a higher risk for fraud.
  • High Ticket Items: If the average price of your offerings is excessively high, you could be identified as high risk. This is due to the fact that the high prices could increase your chances of fraudulent activity. 

Best Practices To Finding Solid And Reputable High Risk Merchant Providers

Without question, if you have been categorized as a high risk merchant, you will face higher account fees, processing charges, and longer contracts. The key to helping you find the best deal is to do the following:

  • Research: Read the provider’s customer reviews for insights on the integrity of the company.
  • Study Your Contract: You will save yourself a headache and money if you scour your contract for anything unsavory.
  • Fix Your Credit Score: A higher credit score = less risk for your processor. 
  • Don’t Fudge: Do not lie on your application. Ever. The truth will come out and you will be out of the game. 

To Sums Things Up

Although being a high risk merchant has it drawbacks and challenges, they are not insurmountable. Be prepared, do your research, and you will find a high risk merchant account provider that will suit your needs.

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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