Does Being a High Risk Merchant Mean You Are a High Risk Person?

Nov 20, 2014
high risk merchant accountYou decided to start your own company. It does not matter if you are a brick and mortar business or an e-Commerce merchant, in order to makes as much money as possible you need to be able to process credit and debit cards. Perhaps you have applied at several old-line processors and maybe your own bank, but all you hear is that you are high risk and need a high risk merchant account. And they all declined you.

At first glance this can hurt your feelings of self-worth and you wonder why you are being singled out as high risk. Your credit rating isn’t the best, but it isn’t the worst, either. You have not been convicted of a crime and you certainly haven’t been involved in any money laundering. You even go to church every Sunday. Why do they all say you are a high risk?

Needing a high risk merchant account does not mean you are a high risk individual. However, someone with really poor credit may be considered to have high risk potential. When you are informed you are high risk it is all dependent on the type of industry you will be serving. The card associations, not the processor, decides which industries are considered high risk. And you would be surprised at some of the seemingly innocuous businesses that are on the hit list.

Maybe you have a dating site for senior citizens or people of a certain religion. Unfortunately this is considered in the adult class which also includes adult toys, sex videos, and other adult industries. Since this industry reaps billions of dollars in sales annually, it can’t be all that bad as a business, right? The card associations judge an industry by the number of chargebacks and disputes. If you are in an industry where over 3% of your customers say they didn’t like your product or service, or they did not make the charge at all, you are high risk.

Perhaps you have decided to sell vitamins, minerals and supplements on line. Your products are meant to keep people healthy. How can that be high risk? The card associations look long and hard at nutraceuticals and consider them high risk merchant accounts. One problem or issue is that the industry as a whole is not regulated by the federal government. There are plenty of devious people out there making false claims about their products – especially when it comes to weight loss. Customers will claim that the product did not do what was advertised and there is a landslide of chargebacks. This affects the business owner who just wants to sell vitamins and minerals. You are all classified together.

Know that you are not a high risk person; you just need a high risk merchant account. Your best option is to choose a processor that is a high risk expert and understands the trials and tribulations of your individual industry. This processor could have your account opened within 48 hours. There are no application fees. There generally are no setup fees. There are safe, secure gateway options. And you do not have to have your own Visa and MasterCard license.

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