Huh… I need a “High Risk Merchant Account!?”

Jul 20, 2015

What is a high risk merchant account? Often, when merchants hear about high risk accounts, they start to wonder what kinds of accounts they are and who needs them. Unknown to them, high risk merchant accounts can be a life saver, especially for people dealing in “risky” industries.

A high risk merchant account is defined as an account for card processing in a situation where the account holder is already labeled as “high risk” by credit card processing banks. A bank can classify your business as high risk for different reasons. Once you’re classified as high risk, it may be almost impossible to have your payment transactions processed by a traditional bank. On rare occasions where the bank accepts to process your cards, it will usually be at much higher rates.

High risk processing companies are companies that specialize in high risk processing. They are more accessible than banks when you have a high risk business. Once you’ve opened an account, you will be able to be paid using cards without any problems at all. Moreover, the rates are often lower than banks.

Which Businesses are Likely to be Categorized as High Risk?

If your business was labeled as high risk, it is probably because your current card processor thinks that your industry or the business itself is not very safe. For instance, a company that deals in travel can be deemed high risk due the high levels of cancelations that sometimes occur.

Also, you may be considered high risk if you work in an industry that is inherently unsafe. A good example is people who sell guns. Trade in guns is heavily regulated at the Federal level because of several reasons. In such an industry, chargeback aren’t uncommon. For traditional banks, this is rather too risky. Another good example is businesses that deal in adult content which is another industry that is heavily regulated at nearly every level. If you work in any of these industries, a high risk merchant account would be a great option.

Interestingly, a quality that makes one merchant risky to a certain card processor might actually be acceptable to a different processor. For instance, while banks are naturally unlikely to approve accounts for businesses in the adult content industry, you can easily open an account for such businesses with most high risk processing companies. You may be asked to pay more in terms or rates and fees but you will get a very effective account that accepts all major cards.

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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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