How to get the lowest rate for a high risk merchant account

Aug 07, 2013

What is a high risk business:

There’s a great deal to consider before setting up a business and the most fundamental aspect of planning a new business is to understand the risk your business is associated with. Numerous variables such as the industry profile, business model, products and services offered, financial stability and longevity of the type of business help determine the level of risk associated. For example, restaurant businesses and web hosting qualify for low risk businesses whereas businesses that are very difficult to underwrite such as the traditional e-commerce merchants or the more specific online dating, travel industry or an offline business such as an insurance or a law firm are considered high risk businesses. These high risk businesses are often associated with an excessive amount of chargebacks, frauds, refunds, high loss ratios and a likelihood of disappearing overnight.

Why should your business be high risk and not low to medium risk?

Often times, traditional acquiring banks avoid conducting business if you have a high risk business, but don’t be discouraged because you had trouble being approved for a merchant account. Once you have cleared the initial hurdle of setting up an account with the help of a third party merchant account provider, you enjoy fewer restrictions with lower costs and higher profits.

The main advantage of a high risk business is that you will benefit from a substantial sales increase and enjoy lower costs. Fast growing businesses require high-volume payment processing to power growth and high risk accounts give you unlimited payment processing and the ability to grow your business quickly and easily. The importance of credit card payment cannot be argued as it has been the most popular payment source especially in online businesses, and without having a credit card payment option, you are simply going to lose a significant number of your credit card holding customers. But while it is certainly important to offer buyers the ability to purchase with cards, the growth of high risk payment alternatives such as electronic checks and international bank transfers cannot be ignored either. Up to 50% of US buyers do not have cards or are maxed out on cards and yet 90% of Americans have a checking or saving accounts and can purchase with electronic checks. Moreover, card penetration is significantly low outside of the US and most global shoppers prefer to pay with international bank transfers and thus, adding alternative high risk payment options to your high risk merchant account is simply good business and you don’t unnecessarily lose sales to your competitors and limit profits.

Additionally, many merchants often use their high risk merchant account business as a good reference when applying for other forms of credit so it is important to remember that your credit maybe challenged for now but as your credit card and alternative high risk payment acceptance grows above the initial monthly volume, you are adding to your business credit.

Research, Negotiate and Be Realistic.

There is no shortage of third party merchant account providers and they are always in strong competition with one another offering you solutions based on a variety of reasons such as their in-house risk and underwriting management or the ability to spread an account among several banks. Their rates tend to be lower than a bank offering, although still higher than a standard account to offset the risk involved.

Choose a provider who can offer you the full range of payment services from banking to credit card processing and if necessary, open multiple accounts to avoid reaching volume caps. You can also go for offshore merchant account providers who do not demand high initials costs, do not close accounts when they see the customers business growing and are much feasible for the high-risk businesses. Some providers are consistently better than others in determining risk and clearly setting expectations so be cautious when selecting a partner. It’s also important to keep an eye out for the various fees you are charged by the provider. While some charge an application fee and others don’t, there are two types of fees that make up the majority of the cost – a transaction fee or an authorization fee and a discount rate. Some other fees to watch out for are monthly maintenance fees, statement fees, chargeback fees and monthly minimums.

In the end, be realistic and understand that high risk merchants are going to have higher rates and fees. Negotiate your fee and every line of your contract with the provider so you save money on payment processing cost and focus more on your business to make higher profits.


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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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