The barriers to opening an online business are high and are fraught with challenges. Add to that being labeled as a “high risk business”, and well, your problems have just compounded. These difficulties come in the form of finding a reputable payment processor willing to grant high risk businesses the means to accept credit card payments online.
What is a high risk business and why are there so many negative consequences to being labeled as such?
A business is usually labeled high risk for a number of factors. Risk is largely based on the merchant’s probability of having chargebacks, returns, the business’s history, and the planned method of accepting credit cards. A large volume of returns also flags the merchant down as being high risk. For processors, too many returns signify that the merchant is missing the mark.
Other factors that can put a business into the “high risk” category include:
- You are a terminated merchant (TMF), or you lost your previous merchant processor due to excessive chargebacks.
- You are new in business and with little credit card processing history.
- You are in an industry with high chargeback ratios.
- You offer subscription-based services or products.
- You are a multi-currency business.
- You have a bad credit history.
- You are an international merchant or you do business with countries known for their high chargeback risk.
Some of the high risk products or services flagged by processors include: online gambling or casinos, pharmaceuticals or drug stores, Bitcoins or Forex trading, and dating services, just to name a few.
Banks have a vested interest in ensuring that both customers and merchants keep the “value of their agreement” without violating the payment processing structure or disputing the transaction. Why? At the end of the day, the bank is the one that covers the maximum risk of payment processing.
As a result, high risk businesses will have trouble securing a standard account with most acquirers. At this point, their only solution is to find a high risk merchant account provider. But the journey doesn’t end there. Now the high risk merchant must contend with the consequences of being labeled a high risk merchant. Some of the most notable problems are restrictions and very high processing fees that will eventually eat away at your bottom line.
High risk merchants therefore have to do their due diligence and research the best high risk merchant account providers to ensure they secure fair contracts and reasonable fees. Also, it is helpful to prepare and gather important documentation to present to those high-risk merchant account providers you have chosen to investigate.
EMB is an award-winning payment processor, specializing in high risk merchant accounts. It offers secure, dependable, affordable credit card processing.
The process is easy. After a simple application is filled out online, some of the supporting documentation that they require include:
- A valid, government-issued ID such as a driver’s license or passport
- A bank letter or a pre-printed voided check
- A secure, working website
- Three months worth of the most recent bank statements
- Three months of the most recent processing statements (if applicable)
EMB promises an open and honest application process, with as little as a 24-hour wait to be approved for a high risk merchant account.
Being labeled “high risk” should not signal the end of a high risk business. With more merchant account providers stepping in to remedy the lack of trustworthy and honest providers, high risk businesses have more options to accept credit card payments than ever.