Breaking Down Wireless Payment Processing vs. Square for High Risk Merchants

Jan 06, 2014


Mobile payment apps, wireless terminals, and online payment processing is changing the way retail works with regard to credit and debit card transactions. Any business now needs to have the ability to enable their app-savvy consumer base to make purchases as they peruse a business’ products. There are options available to merchants as to what is the best mobile payment process, but choosing the best option can be a tricky matter.

Traditionally the best approach for credit and debit card payment processing is to set up a merchant account. For high-risk merchants, this can be a challenging proposition as the requirements from banks and other merchant service providers can be difficult to fulfill. High-risk credit card processing becomes a top priority. This is where high-risk merchant accounts from online providers and offshore banks become a major player. Yet, using Square high-risk merchants can ditch the wireless terminals in favor of a simple, upfront setup and payment plan.

Square utilizes a $275 per month flat fee 2.75% processing fee per transaction creating a simple, and headache-free payment plan for merchants. When compared to high-risk credit card processing services with complicated application processes and multiple fees, Square seems like a great choice. However, this simplicity doesn’t always reflect smart finances below skin level.

The benefit of high-risk merchant accounts and credit processing is that the screening for fraud and payment problems begins before, and during the application process, while Square is forced to be meticulously cautious with its transactions. For a high-risk merchant, this means that Square may put a hold on a ‘suspicious’ transaction for multiple days and weeks, depriving your business of profit and constricting your margins significantly. In the high-risk sector, this is a dangerous proposition. High-risk credit payment processing regularly screens and provides your business with its profit within 36 hours.

Additionally, Square’s flat rates work great for high-volume low-price retail transactions. However, if your business offers expensive services, as is common in high-risk businesses, and creates large profit margins over the span of a year Square’s flat rates can be more expensive than setting up a merchant account and wireless terminal.

As a high-risk merchant, it’s your decision and analysis that goes into selecting the correct mobile payment method. High-risk credit payment processing and wireless terminals may be cumbersome and ungainly regarding setup and fees, but they pay you back with regular returns on sales by avoiding holds due to suspicious transactions. Square is simple, yet its flat rates can harm a business’ bottom line and leave them vulnerable to dry spells where a hold will prevent them from receiving the funds from a transaction.

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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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