For Better or Worse, Credit Cards are Here to Stay

Nov 26, 2014

If you have any kind of business where you sell goods and services to a consumer, in order for you to remain above water, you must accept plastic – whether it is credit cards, debit cards, or both. This is especially true if you are a high risk merchant and need a high risk merchant account.

In the U.S. credit has been around since the founding of the colonies. Farmers would purchase seed and other agricultural products until harvest at which time they would pay what they owed. A bad harvest meant lean times for everyone, including the store owners. It wasn’t until the 1960’s that larger community banks began issuing and processing their own branded credit cards. They were given to only those with stellar credit as an enticement to remain with the bank. At a 1.5% interest rate, the banks rarely made profits on their cards.

Then the major retailers saw an opportunity for larger average tickets and began issuing their own branded cards. Once upon a time it was prestigious to have a Sears’s card because it was so hard to get approved. The card associations came to be and we were offered different brands of Visa’s, MasterCard’s and then single issuers like American Express and others. The world was full of plastic and it was – and is –used by millions of Americans.

There was a time in our country that the economic structure encouraged purchasing only what was needed. There is a big difference between needs and wants. Purchases of wants were made by the wealthy. With the advance of credit cards, those who wanted an item but did not actually need it could buy it ‘on time.’ They could enjoy it in real time while paying for it over months and years. Then there were those that actually needed a product or service and did not have the immediate cash so they depended on their credit cards. They were not living above their means, but used credit as a means to an end.

By the late 1980’s credit had gotten out of hand. Everyone was in debit – it was the American way of life. If someone had always paid cash for their purchases they could not be approved for a mortgage. They had no credit. Having credit is a two-way street. Those with a great deal of ‘open-to-buy’ can be conceived as a high risk. Those who max out their cards are considered high risk. It is a conundrum.

Here you are trying to open a merchant account for your new business and you have been told you need a high risk merchant account. This is not because you have too much open credit or that your credit cards are maxed out. It means that you have chosen an industry that is laden with a high level of chargebacks. Credit card associations dislike chargebacks.  At the very least they feel that it is a sign of a shady operation. You are selling goods or services for which a high number of customers say your product was misrepresented.

A high risk merchant account expert has ways and means available to minimize your chargebacks. This doesn’t change your rating, but it may save up to 30% of your annual chargeback fees which can be quite staggering. You must keep your chargebacks under 3% in order to stay below radar.

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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