Is My Business High Risk? 5 Credit Card Processing Tips Explained

Jan 08, 2021

Being a high risk merchant does have its challenges, especially when you are trying to secure a payment processor. The reality is that most payment processors don’t want to carry the risk that a high risk business entails. 

Typically, high risk businesses are more likely to attract chargebacks and fraud. This means that any costs associated with this will likely be covered by the payment processor. 

Is My Business High Risk?

There are a variety of ways that processors and banks make the final determination as to whether or not your business is high risk. Here are just a few:

  • If your business type is highly regulated by the government
  • If your business is likely to default on a loan
  • If your line of business has demonstrated a high chargeback rate or fraud
  • If you have a low personal credit score
  • If your products or services are of “questionable legality”

5 Tips To Ensure You Secure The Best Payment Processor

Before you begin your search in finding the best payment processor for your high risk business, you must thoroughly do your homework. Take time to research a processor who actually understands the high risk industry, especially your particular line of business. Also, look up reviews online, ask fellow colleagues. Once you have narrowed it down to a few, research their contract, their fees, and their customer support. 

After that, it’s time to prepare yourself for the application process. But before you move forward with a decision, you must have some critical things in place. This will save you time and headaches when it comes to choosing your payment processor and increasing your chances that your merchant account will be approved. 

  • Come Clean With Your Payment Processor

Do know that your underwriter will audit your company and therefore you are not doing yourself any favors by withholding critical information? Be clear and honest about the type of business and products/services you are offering. By not doing so, you risk your account being closed. 

  • Demonstrate Your Assets

If you happen to own inventory, equipment, tools, buildings, all of these items are potential, money-making resources. This also communicates to the payment processor that you do have some capital to cover any loss. 

  • Accept Your Business Risk

Unless you have had a previous experience with payment processors, the reality is that you must embrace the terms and conditions that most high risk payment processors provide. The good news is that, once you have gained some traction and good reputation, you do have the possibility of revisiting your terms and conditions and perhaps negotiate better rates.

  • Steer Clear Of Transaction Limits

If possible, try to find a high risk payment processor that does not impose transaction limits. By exceeding these limits, you will be charged a penalty fee. This is greatly limiting as you grow because transactions will naturally go up as your business expands. 

  • Ask About Their Reserve Limits

One of the many ways that processors protect themselves from risk is to take a percentage of your earnings in a reserve account to cover any chargebacks. Sometimes these percentages can be as much as 15% to 20%. This can place a serious toll on your earnings. Do aim for the lowest percentage as possible. 

It Is Possible To Find A Good High Risk Payment Processor

Regardless of the overwhelming odds of finding a trustworthy high risk merchant account provider, it is not an impossibility. There are plenty of high risk merchants who are satisfied with their current partnerships with professional, highly knowledgeable, high risk merchant account providers. By using the tips above, you will be well on your way to finding your perfect fit. 

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.