Why A High Risk Merchant Account Is Key For Your Business

Sep 15, 2021

Launching and operating a business can be an all-consuming endeavor. A considerable amount of time, capital, and strategy is essential. Among the plethora of requirements to start and sustain a business, there is one inescapable event that rattles even the most seasoned entrepreneur…risk. 

The conventional risk associated with businesses usually refer to the possibility of falling short of profit goals, increased competition, and governmental regulations. These are part and parcel of running a business. 

Then there are risks associated with running a booming, highly lucrative venture. These types of businesses are more likely to expose the merchant to a different type of risk, the risk for fraud and chargebacks. 

What Are High Risk Merchant Accounts?

Merchants who operate businesses where there are higher than normal chargebacks and fraud, conduct their business from a specific location, or simply sell services and products that could be labeled as legally questionable, tend to be labelled high risk by traditional payment processors. 

Traditional payment processors are well aware that taking on high risk merchants as clients would be detrimental to their bottom line as they would be on the hook for financial losses and a damaged reputation. 

Once a merchant has received the designation as a high risk business, they are advised to seek a high risk merchant account from a reputable high risk merchant account provider.

A high risk merchant account is a distinct payment processing account that can accept both debit and credit card transactions. The downside to opening up a high risk merchant account is the considerably higher fees to process these payments. In fact, high risk merchants can expect to pay up to 1% to 2% more for every transaction as opposed to low risk merchants. 

Additionally, high risk merchants will find that they will be offered longer contracts, tiered pricing, chargeback fees, automatic renewal clauses, early termination fees and so much more. 

High risk merchants are well advised to study their contracts carefully, even consult with a lawyer to review the contract before they sign it. This will ensure that the agreement will be favorable for both the merchant and the payment provider. 

Choosing A High Risk Merchant Account Provider

High risk merchant account providers may find themselves in what seems like a high risk payment processing “no man’s land”,  as many traditional payment providers will not work with them. However, they must resist the temptation to settle on just anybody and exercise extreme scrutiny when seeking a reputable high risk merchant provider. 

It is well advised to avoid high risk offshore merchant accounts since they can mean great personal and financial risk should an unsuitable processor be chosen. 

Research can not be emphasized enough as there are many unscrupulous processors ready to make bold claims about their experience in the high risk industry when this is truly not the case. Check their reputation, reviews, and ask for referrals. As mentioned before, read the contract carefully and have legal professional help to scan for any problematic clauses. 

Being labeled as a high risk merchant is not the end of the world and it certainly doesn’t mean a death sentence to your business. On the contrary, many high risk businesses are enjoying the benefits of processing their payments securely with high risk merchant account providers that truly have the expertise to move businesses forward. 

Final Words

Once you have secured a high risk merchant account with a trustworthy provider, treat the relationship as a partnership. Ensure that you are doing everything you can to keep your chargebacks low (usually lower than 1%) to avoid fees and account closure.

Follow the terms of your contract. This will make sure that your business has the backing it needs to operate successfully for many years to come. 

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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