How High-Risk ACH Transactions Work

Jul 25, 2022

Credit cards have long been held as the preferred form of payment by consumers. Businesses prefer them as they do not have to worry about paperwork, bookkeeping, or tracking payments. 

Although credit cards are the ideal form of payment that can streamline the payment process for both businesses and customers alike, not all businesses will be approved for a credit card processing account. Especially if you are a high-risk business. 

Plus, more consumers are reluctant to use credit cards, wanting to get rid of any personal credit card debt. In order to continue benefiting from the convenience of both electronic and online payments, a payment network by the name of ACH facilitates electronic payments between banks in the U.S. 

What Is ACH?

You may have heard of ACH transactions being used as another form of payment by businesses. But what is ACH?

ACH (Automated Clearing House) is a payment network, based in the U.S. and established by U.S. banks, that allows for money to be electronically transferred from one bank account to another. This particular payment network system does not use wire transfers, credit cards, or cash.

What Is A High-Risk ACH Transaction?

There are certain high-risk industries that rely on ACH transactions to accept payments such as: 

  • Annual Memberships
  • Adult Websites
  • Alcohol Sales through the Internet and by Phone
  • Auctions
  • Bad Credit
  • Bail Bonds – (Card Not Present)
  • Business Opportunities
  • Cigars/Cigarettes
  • Collections Agencies
  • Credit Repair/Credit Counseling
  • Currency Exchange (FOREX, Bitcoins, quasi-cash)

Since these businesses are considered high-risk by most traditional merchant account providers, they are not able to acquire a merchant account to process their payments. Instead, they must turn to a high-risk ACH merchant account provider.

A high-risk ACH account is essentially a merchant account used for ACH transactions, for a business that falls under the high-risk category. 

The Benefits Of ACH Processing

There are many benefits to using ACH processing for your business. Let’s take a look at a few:

1. No human error

There is no need to worry about anyone manually processing your payments. That is because ACH payments are completely automated. With automated payments, any delays or “clerical errors” are eliminated for both businesses and customers.

2. No paper checks

ACH payments can be processed numerous times a day without having to use a single paper check. This also means you don’t have to waste time going to the bank. No longer having to track and process payments manually mean that you can focus more on operating and growing your business. Furthermore, through ACH, you can have a quick and efficient billing and payment process for both your business and your customers. 

3. Lower fees

Most financial institutions are able to scale back processing fees if ACH payments are processed in multiple batches a day. This means less cost and more money for your bottom line. Also, depending on the bank and the type of transfer involved, ACH transfers can also be completely free. If there happens to be a fee, it would only be a few dollars.  

4. Security

With the rise of identity fraud and other cyber attacks growing rapidly, ACH offers state-of-the-art encryption technology within its network. Because of this, ACH payment processing offers far more security than paper checks. 

5. More payment options for your customers

Customers are always looking to purchase online by using their preferred method of payment. It is what keeps them coming back as repeat customers. It is also what drives new customers to your online store. By offering a wide range of payment options, you are establishing yourself as a reliable company. ACH processing also means that you are offering your customers a more “streamlined” online checkout process. 

6. Invoicing is automatic

Everything about ACH is automatic, including its invoicing. You will not need to send out invoices manually. This means saving time from having to do tedious work. It also means that your customers are billed quickly, making it easier for your customers to pay you. 

How To Choose The Right High-Risk ACH Merchant Account Provider

Luckily, there are more high-risk merchant account providers servicing high-risk merchants like never before. However, not all providers are created equal. 

If you are a high-risk merchant that is in need of ACH payment services, you will need to do your research and find a provider that offers the following:

1. Do they offer ACH transfer services?

Determine whether or not the high-risk merchant account provider actually offers ACH services. Many of these providers offer a host of different payment solutions. Many only offer credit card processing services and not ACH. The best thing to do is to ask. 

2. Do they accept your high-risk industry? 

Just because your provider services the high-risk industry does not mean that it works with your specific industry. Some may specialize in a certain industry, like cannabis or adult entertainment. There may be others that work only with certain high-risk industry businesses and not yours specifically. Always check with the provider to see if they work with your specific industry. 

3. Seek fair and balanced pricing

As a high-risk merchant, you will be expected to pay higher fees than a lower-risk merchant. However, a high-risk merchant account provider that is reputable will ensure that these fees will be kept to a fair minimum. Get familiar with fees from major credit card companies such as Mastercard, Visa, and Discover. They should all be relatively similar. Be alert and watch out for any discrepancies. 

Get A High-Risk ACH Merchant Account

As previously mentioned, using ACH will greatly benefit your business since it offers a simple, secure, and seamless way for your business to receive payment via the ACH network system. This can propel your business into further growth and boost your profits. 

As a high-risk business, you will greatly benefit from getting a high-risk ACH merchant account. Take the time to find a reputable provider and start processing ACH payments today.

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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