The “High Risk” Stigma for Merchant Accounts and Your Business

Apr 02, 2014

The credit processing system can be confusing for new merchants that are attempting to open merchant accounts. The reality is that if your business is in an industry tabbed as ‘high risk’ by the traditional banking systems opening a merchant account can be difficult. Unforeseen hurdles will spring up and there will be disadvantages affecting your business.

The ‘High Risk’ Stigma

Fair or not, there is a stigma attached to ‘high risk’ businesses. It will be significantly more difficult to find credit processors willing to open a merchant account for your business. The available alternative is to seek high-risk processors. High-risk processors have experience handling businesses in similar fields as yours. Yet, if you choose this route you need to check the background of your processor. High-risk processing is notorious for unethical service providers that can hit you hard in the small print of your agreement.

Why are you ‘High Risk’?

There are some common characteristics of a business that will land it a high-risk tag. The first and most obvious is if you’re an offshore business. If you’re operating from outside the United States you’ll be all but automatically considered high risk.

The second reason for banks to call you high risk is if you operate in an industry with a legal grey zone. For example, marijuana dispensaries are notorious for differing legal standing based on state law or federal law. This will cause most banks to opt for a conservative approach by declining your application to protect them from legal consequences.

A third reason you are high risk is if you use what the bank considers questionable sales and marketing tactics. If your business plan lands in a hazy area with regard to your marketing tactics the banks will again choose to protect themselves from any legal ramifications.

Finally, poor credit history can doom your business even though it’s your bad credit, not the business’ bad credit. High chargeback ratios, delinquent payments, and a bad credit score will land you on the high-risk list fast.

What ‘High Risk’ Means for Business

Time to face the music. High risk means your credit processing will come with higher rates, worse terms, and the frustration of banks declining you. This is a cold hard reality. The best path available for your business is to find a high-risk processing provider that is reputable like eMerchantBroker. They can provide you with the best opportunity for opening a merchant account on the best terms possible. eMerchantBroker has a team that’s been at this for years and can find you the best credit processor for your business.


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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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