Understanding High Risk Credit Card Processing

Nov 26, 2019

All eCommerce merchants must set up a payment method for their customers. This payment solution allows a buyer to pay for an item or a subscription service.

Credit card is a common payment method among online customers and businesses as well. And failure to add a credit card processing solution means denying your customers a favorite means of payment.

For business classified as risky, credit card processing turns into high-risk credit card processing. The risky classifications make it more difficult to get a merchant account, let alone a credit card processing solution.

What Makes a Business Risky?

The following reasons may lead to a risky classification:

  • Your firm is in a regulated sector or sells a controlled product like the adult industry and tobacco.
  • The nature of the product you sell or service you offer e.g. electronics, software,
  • Your business involves extended chargeback liability waiting periods like annual subscriptions.
  • Your sector has a reputation of high chargebacks.
  • Your business is in the MATCH (Member Alert to Control High-Risk) list

These are some of the most common reasons the financial system may term you as high-risk. But some account providers or processor will turn you down for a list of other reasons.

A High-Risk Credit Card Processor is Your Best Option

If you’ve confirmed your business is risky, it is a better idea to partner with a high-risk credit card processor because they understand your needs better.

Most normal processors will reject your application, or charge you in the clouds if they onboard your high-risk.

How High-Risk Processors Differ

Because of the risks involved, payment processing rates for high-risk processors are higher than those of a low-risk processing.

Merchants with a high-risk classification face tougher conditions compared to their low-risk counterparts. Everything is a hassle all the way from account application to approval and even payment processing.

Furthermore, a risky merchant may be requested to set aside a reserve fund. Some processors will retain a lump sum if the business records high chargebacks.

What’s a Reserve Fund?

A merchant reserve fund is an emergency fund a processor asks a retailer to store in a separate account as they begin processing payments. It can be anything from 5% to 15% of a merchant’s deposits.

The processor retains this reserve fund for half-a-year or so, then later allows the business access to these finances. This fund acts as a security fund or collateral that the processor holds back for processing your risky payments.

Banking institutions and payment processors take this measure to reduce liability in the event of a major fraud or request for reverse charges.

Final Words

High-risk credit card processing is now available for merchants running businesses in risky sectors. Partner with the right service provider to get a fair and affordable deal.

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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