As a merchant in today’s world, the ability to process credit card transactions is critical to the survival of your business. For high-risk enterprises, however, this privilege doesn’t come easy. Every typical acquiring bank prefers to deal with merchants that won’t put their money at risk. So, if a bank considers you high-risk, it will be very reluctant to lend you payment processing services.
Getting rejected by a payment processor can induce a panic attack, but it isn’t a death knell. It just means that you will have to be a bit more inventive to secure the means of accepting credit cards. The journey to achieving that goal starts with answering this fundamental question: what is a high-risk merchant account?
High-Risk Merchant Accounts
Every payment processor has its ways of determining whether a business is too “high-risk” to work with, but essentially, merchants that operate locally, have a decent credit history, sell low-risk goods or services, and fit well with the community will find it easy to get credit card processing accounts. However, if you run an online business, have poor credit, or are in an industry that is known to have too many risks, you’ll need to apply for a high-risk merchant account.
While they function like regular accounts, high-risk merchant accounts are named so because the providers that issue them usually have less hope of recouping any debts if the merchant decides or is forced to shut down the business. Therefore, high-risk credit card processors take up part of the merchant’s risk as their own and are often willing to suffer the consequences of the business’ failure.
Signing Up for High-Risk Credit Card Processing
If you own a high-risk business, a high-risk merchant account will enable you to give your customers the payment options they want, without worrying about meeting stringent requirements from conventional processors. That said, even high-risk account providers have their own guidelines.
For instance, most processors will be more willing to deal with businesses that have large numbers of sales, and will, therefore, insist that you meet a set amount of money in daily, weekly or monthly transactions. A processor will also consider your background, and negative factors like a bad credit score, blacklist and bankruptcy reports or a history of criminal activity will likely drive your processing fees up to the roof.
The takeaway here is that, the further away your business is to the processor’s comfort zone, the more complicated and expensive it will be to land a merchant account.
Nevertheless, if you find a reliable high-risk account provider, you will have much less to worry about regarding processing rates and quality of service.