Have you heard the term “high-risk” but are unsure what exactly it means in the business setting? It is important to understand what being labeled high-risk would mean for your business because it can negatively affect your ability to receiving financing, insurance and merchant accounts. Knowing what to avoid and be aware of can save you time and stress later on down the road.
A company is considered high-risk based on two different condition. First, your business can be labeled high risk if it operates within a high-risk industry; this condition addresses safety and health concerns. The second condition involves your business having a risk of financial failure; this condition addresses your company’s viability.
According to Houston Chronicle writer Jerry Anderson, “Banks and merchant account providers consider a business as high risk because of a high level of charge backs, a merchant receives credit card payments, but customers cancel transactions; refunds and returns; and credit card fraud.”
In addition, if your business is considered high-risk due to the industry, there will be local, state and federal laws that you must be compliant with. Keep in mind that following such laws and regulations will mean expenditures for compliance-related resources. For example, you may be required to hire more personnel or protective gear.
You must also consider that operating as a high-risk business may mean being charged higher premiums by your insurer in order to have the proper coverage. In addition, if you are applying for a high-risk loan and are a high-risk business that has bad credit, you will pay a high down payment.
Examples of high-risk industries include agriculture, construction and mining industries due to the nation-leading number of fatalities that they experience. Other industries include cannabis and health care. High-risk business types also exist; such as, Internet vitamins, gun shops and pawn shops.
There are options out there for those looking for payment processing providers that are comfortable working with those who have been labeled as high risk. eMerchantBroker.com specializes in working with such businesses. Whether your business is related to online firearm sales, travel and timeshares, e-cigs, sports betting, gaming, etc., there is a merchant account for you. The application process is simple, fast and hassle free. Get started on your application for a high risk merchant account today.
