Quick Tips for High-Risk Credit Card Processing

Jul 13, 2018

To accept and process credit card transactions safely, businesses must have merchant accounts and payment gateways. Merchants in low-risk industries, with good reputations, and good credit scores, have little to no problems getting approved for merchant accounts and gateways.<
Businesses classified by banks as “high risk” aren’t as lucky. Merchants that sell electronic cigarettes, adult entertainment, nutraceuticals, and credit repair services, businesses with potential legal issues, those with poor credit, and ones that are prone to excessive chargebacks are classified as “high risk.” When they receive this classification, banks don’t want to work with them because these types of business are more likely to close up promptly or go bankrupt without paying all of their bills. Therefore, if you are a high-risk business, you need to work harder to get what you need. If you need to get high-risk credit card processing, you need to do a little planning to increase your chances of approval.

Get Ready to Share Your Financial History

If you are new to accepting credit cards, be prepared to share your personal and business financial history with the processor. Sharing this information will show that you are serious about business, that you have some savings, and earning potential. In the end, merchant service providers and processors just want to know that a merchant is a legitimate, reputable company with a healthy financial history.

However, if you have taken credit card payments previously, share that information. Even if for some reason, your merchant account was terminated, share. Be sure you are able to tell them why you had chargebacks, whether they were from stolen credit cards or from friendly fraudulent, as well as your average ticket cost and your average monthly transaction volumes. In the end, remember that it’s better to be honest, then for an underwriter to find something you didn’t disclose. Usually, a high-risk credit card processor can find a solution for you if you are willing to accept certain terms and are honest about your company and its finances.

Let Them Know How You Cut Down on Risk

Sometimes, it is best to talk your way through it. Since there are many, many small online businesses and startups looking for merchant accounts and processors, providers sift through applications quickly. When they don’t understand a business or find their products and services questionable, they are quick to classify them as high risk. To prevent this from happening, send a processor a letter or take the time to call the business and give them additional details.

If you are in a high-risk industry, then be honest about it and give them examples of how you are avoiding refunds and chargebacks. You are more likely to get approved if your high-risk credit card processing company understands what you do and the actions you are taking to run a successful business.

Clean Up Your Credit

Poor credit almost is as bad as no credit. Check your credit report from the major reporting agencies, like Trans Union, Equifax, and Experian, and see if you have anything outstanding. If you do, take care of it.

If your business credit is nonexistent, get a business line of credit or credit card and make some purchases and re-pay quickly. This is a quick way to build up your business credit score. Again, no matter the situation, be honest and upfront with a processor.

Work with a High-Risk Credit Card Processor

You best chances of getting approved for a merchant account is to work with a high-risk credit card processing company. These processors specialize in business that work in high-risk industries, so they are aware of the challenges and risk and associated with their companies. A good high-risk processor will use its expertise to help you mitigate risk while maximizing your overall credit card sales.

A Few Other Considerations

With all of this being said, it’s pretty clear that high-risk merchants still have opportunities to accept credit card payments. In addition to having to jump through more hoops when seeking credit card processing, you should also expect to pay higher rates and fees. Also, don’t be surprised if a rolling reserve is required. This is a separate account that a merchant account provider requires and can draw on if you are delinquent on fees or you go bankrupt.

Another thing to remember is that high-risk merchants who can proof that they aren’t that risky can get banks to reclassify them. About six months of positive credit card processing or a small number of chargebacks and refunds can lead to a reclassification. Also, you would need to have a chargeback rate of less than 1% of your total transactions.

The Final Move – What’s Next

Now that you know how to move forward, it’s time to set your sights on a high-risk credit card processing company If you are looking for a high-risk credit card processing company to handle your business’s credit card transactions, then consider eMerchantBroker.com (EMB). It specializes in providing payment solutions to businesses in high-risk industries.

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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