High Risk ACH Check Processing from eMerchantBroker

Sep 04, 2012

High-risk ACH check processing accounts are not as hard to come by as you might think. Many businesses who seek the benefits of automated clearing house processing struggle with the strict rules and high set-up fees many banks apply to high-risk industries. First of all, let’s take a look at what ACH check processing is and how it actually differs from a typical credit card processing system. Then we’ll get into why ACH can be so useful for a high-risk business, and how you can go about setting one up if the banks you’ve tried so far are not playing ball.

What is ACH Check Processing?

ACH essentially allows you to process payments directly from a customer’s checking account, without the need for a credit card. It’s a form of ‘electronic check’ – it operates similarly to a written check, in the sense that it is an authorization from the customer which lets their bank know you have permission to process the agreed amount from the customer’s account.

How Does It Work?

The customer will provide you with essential information about their bank account, which you then perform the electronic check transaction. At this point, your payment processor will credit your account for the amount in question. The amount is debited from the customer’s bank account via the Automated Clearing House system – this usually takes one or two business days to process. At this point, the transaction will only be complete if there are enough funds in the customer’s account. If there are insufficient funds in the customer’s account, the processor will debit the money back out of your own account.

Why Is It Useful for High-Risk Businesses?

The usefulness of ACH processing for any business is clear. It allows you to take payment from clients before they actually have the cash on hand, meaning you can keep cash flow more consistent. But, of course, there are many problems associated with using ACH for certain types of high-risk businesses.

Because of the waiting period for ACH check processing, it can be hard for high-risk businesses to find banks willing to offer them ACH processing facilities. High-risk businesses may be more likely to find customers who have insufficient funds when the check is processed – for example, credit repair or debt collection agencies tend to be processing payments from people who are in financial difficulties and may not have the funds available on time. High-risk businesses also tend to experience a higher rate of disputed payments or reversed charges. Generally, there is a 7-day window from the debiting of a customer’s account in which the bank may reverse the charge. After this 7-day period, your ACH check processor will release the funds to you.

ACH processing is not only useful for processing payments from your customers – but it can also be used for paying your own employees, and again in that scenario, it can be ideal for companies with irregular cash flow.

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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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