02 Jul

By ipaytotal

Category: High Risk Merchant Accounts



Do you have unique business or need a
High Risk Credit Card Processing Solution?

What is a high risk merchant account?

A high risk merchant account is a bank account for businesses that are considered high risk. Credit score to industry type can categorize you as high risk.

In the event that your business is considered as a high risk merchant, you should be knowing that it’s not an easy task to find a high risk credit card processor. High risk businesses often get declined from certain payment processors and if they are they are accepted, they’re charged significantly higher rates than different organizations.

How do you know if your business has been categorized as a high risk merchant and why is it important to make sure you have the right high risk merchant account for your business? Not knowing the difference or the importance could have a dangerous impact on your business. Businesses that are categorized as high risk have to know who the right high risk credit card processors are, and those processors who are willing to process transactions for your high risk business.

Due diligence on a high risk merchant account comparison with reputable companies, like Ipaytotal, who are offering high risk credit card processing solutions, like merchant accounts and payment gateways, to those businesses that need it the most.These high risk merchant account providers are high risk risk credit card processing companies that are willing to accept the liability for the increased risk associated with those categorized as high-risk businesses. Unexpectedly, most merchants who do fall into this class are unaware of it. To know if your business falls into High Risk Credit card processing sector, call us at Ipaytotal or visit our website www.ipaytotal.com

Get The Best Processing Solutions You Need.

Your plan with any processor ought to incorporate the solutions you need to run your business for fair prices. This implies you can acknowledge the types of credit and debit cards you need without various fees based on the brand of credit card. You should also receive the right terminals and solutions for your business at affordable pricing.

Security Is A Priority.

Secure payment gateways and virtual terminals are a basic segment to search for when searching for a payment processor. Guarantee that all transactions made online are protected by encrypted server transactions, backed by large security and technology companies to ensure all their accounts are safe and transactions are secure.

Why is it Important to Have the “Right” Credit Card Processor for your High Risk Merchant Account?

The primary objective is to ensure you have a merchant account for high risk business when you start ,to avoid the chances of your merchant account being shut down at a later stage. The bank can close your account and hold funds, even without notice. This means you have no way of selling your products or services, it stops all cash flow entirely, and the money from the products or services you sold could be held by the banks for months.When you research a high risk merchant account comparison of companies, take your time,as this is important to start off with the right high risk merchant accounts, so that you increase the prolonged longevity of the account. The bank’s underwriting or due-diligence does not end after the account has been opened by high risk merchant account providers.

There is ongoing risk monitoring that is associated with all high risk merchant accounts. So if an account has been opened under a false context or the business model is deemed high risk after the fact, expect the account to be closed. Alternatively, starting out with the right high risk merchant accounts betters the odds that the acquiring banks will be more lenient.

The label of high risk merchant isn’t an end to your business. Factors such as your industry, location, and even the clientele can categorize your business and apply the high risk merchant account label.

However, this shouldn’t give you panic attacks, just because you may be more difficult to finance, doesn’t mean you can’t get the credit card processing for your business . Many times the approval process can be quick and many companies like us provide free quotes.

High-risk credit card processing can be tricky, but it’s not an end to your business. Running any business in today’s world, more or less requires that you give your customers the option of paying with credit or debit cards. If you’re an eCommerce entrepreneur, credit/debit cards are the only option for getting paid. Although very small businesses can get by with a payment service provider (PSP) such as PayPal or Square, once your business reaches a certain size, you will definetly want to upgrade to a full-service merchant account.

It would have been really nice if all credit card processors would have treated all businesses alike,but they don’t. Large, high-volume businesses receive lower processing rates and often get more generous contract terms. Businesses are also treated differently on the degree of financial risk they present to their processor. All processors will judge your business to determine whether you fall into the “high-risk” category.

If, for any reason, your business is determined to be a high-risk one, the consequences can be severe. Many credit card processors will simply refuse to approve you for a High Risk merchant account, while others will charge you significantly higher rates and fees than you would otherwise have to pay. Regrettably, there are also plenty of High Risk Credit card processors that deliberately market to high-risk businesses that are struggling to get approved for a merchant account, only to rip them off with outrageously high fees and rates, as well as severe contract terms.

High Risk Credit Card Processing Solutions’ Rate

Merchants are assigned either in the high risk or low-risk category by credit card processors. Since most credit card processors select to work with low-risk merchants since they’re not as risky, there aren’t many merchant services that work with high-risk merchants.

A credit card  processor won’t acknowledge you if they think you pose a greater risk of losing them money. They’ll decline your business altogether and accept nobody from that industry Or if they do acknowledge you, some processors will raise the rates and attach extreme charges to balance out the risk  posed by your business. That is the reason why high risk credit card processing is so costly.

How to Obtain a High Risk Credit Card Processing Account

If you’ve been denied a merchant account from various high risk credit card processors, don’t lose hope. There are many high risk credit card providers that specialize in high risk merchant services, so they will surely approve you. Those accounts may be at higher rates.

One thing you should remember is that while you might be viewed as a high risk merchant account with one processor, another processor may not place you in the high risk category. It relies upon how strict or tolerant approval guidelines are for every  processor.

On the off chance that you like what you see from a processor during your search, you ought to apply for their services, at any rate, so you can make sure you’re getting the best rates for your business.

Tips to Lower High Risk Credit Card Processing Costs

Avoid Preset Limits.

Institutions that represent considerable authority in high risk credit card processing will frequently give you an account with preset limits. This looks great to businesses simply in beginning. But, once your business starts to run successful and process a higher volume of transactions, the provider will charge a penalty fee if you exceed the preset limit. This will quickly reduce your overall revenue, so it’s essential to get a merchant account with an unlimited transaction volume. When you think about various high risk credit card processors, ensure you find one that allows you the flexibility to develop your business, regardless of whether it’s high risk.

Read Your Contract.

Most processors will compel you to sign an agreement with them. You should always read the whole contract before you sign your name. Ask as many questions as you need about your merchant account, so you get a reasonable comprehension of what everything implies. Pay close attention to features, limitations, restrictions, and termination fees. Or choose a processor that doesn’t lock you into a contract.

Carefully Select A Processor.

Search out a reliable and trusted merchant account provider that will work with your business. Despite the fact that you’re viewed as high risk, that doesn’t mean you should agree for less than average services and higher rates. Pick a high risk credit card processor that will negotiate terms with you, so you can receive the solutions your business needs from a credit card processor. Look into payment processor reviews to see what different organizations have been saying in regards to each prospect.

Online Viewing And Reports.

Due to today’s innovation, there is rarely any high risk credit card processor that don’t allow real-time reviews of sales reports. Therefore, your processor should offer online viewing and reports, rather than traditionally mailed transaction reports. That way, you can keep track of your transactions and reports at your convenience.

On average, Ipaytotal saves businesses over 40% on credit card processing when they switch over because we offer merchants access to direct cost processing— no fees, no markups and no contract. To know more just fill out our short form and we’ll get back to you and help you save time, give a brief comparison with several multiple merchant account providers, save money i.e., find the best pricing with respect to your particular situation, even if you’ve been declined payment processing before.

How To Determine If Your Business Fall Into High-Risk Credit Card Processing Categories

The most important thing to understand about high-risk businesses is that your high risk credit card processor will determine whether you fall into one of their high-risk categories when you apply for a High Risk merchant account. Either you’re high-risk, or you’re not – there is no middle ground. Beyond that, it gets complicated as every credit card processor has their own unique guidelines for determining whether you’re in the high-risk category. While some business types, such as pornography or drug paraphernalia will  always be placed in the high-risk group while others may or may not be, depending on your processor. Some merchant services providers have very strict guidelines for determining high-risk status, while others use more relaxed criteria. If you’re considering a particular provider, check their website or contact them directly to see if they find your business to be high-risk. This can save you a lot of time and effort filling applications to providers who aren’t going to approve you.

How a merchant service provider treats a high-risk business can also vary widely. Many providers, particularly those that try to offer merchant services at the lowest possible prices, simply do not accept any high-risk businesses at all. This helps to reduce their exposure to fraud and keeps costs low for their existing clients. Other providers will allow certain high-risk companies, but will charge you significantly higher rates and fees for your merchant account due to the elevated risk they’re accepting by giving you a high risk merchant account. There’s also a third category of providers who specialize in placing high-risk businesses. While their rates and fees aren’t a good deal for non-high-risk merchants, they can often provide a merchant account for high-risk businesses that have been turned down by other providers.

While the exact criteria for determining high-risk status vary from one provider to the next, the following factors are usually used to determine whether a business qualifies as high-risk:

  • High chargeback or fraud rate: If your  business has shown a high rate of either chargebacks or outright fraud in the past, you’ll probably be deemed high-risk, too. It is usually based on the behavior pattern of your customers, not you personally.

  • Products or services of questionable legality: This factor is the one, most people associate with high-risk businesses. Distributing pornography or selling drug paraphernalia are the most obvious examples, but there are many others as well.

  • Bad personal credit: Most criterias for determining high-risk status focus on your business, this one focuses on you, the business owner. If, for any  reason, you have a low personal credit rating, you’re more likely to be placed in the high-risk category by some processors.

  • High average ticket sales: If your business routinely accepts unusually high-cost purchases via credit card, you could be considered high-risk. This factor primarily affects businesses such as furniture stores and companies who process a lot of B2B transactions.

Listed below are business types that are often considered high-risk. While this list doesn’t cover every single high-risk business,but it does include the categories that are most often regarded as high-risk. Remember that every high risk credit card processor has their own criteria, so while you might be considered a high-risk business by one provider, you might be approved for a regular, non-high-risk account by a different provider.

Here are the most common types of high-risk businesses:

  • chat sites
  • Airlines or airplane charters
  • All sexually-oriented or pornographic merchants: (i.e., companion or escort services, adult telephone conversations, adult bookstores, dating services, online adult membership or matchmaker services, adult paraphernalia or toys)
  • Annual contracts
  • Antiques
  • Attorney referral services
  • Auctions
  • Automotive brokers
  • Bankruptcy attorneys
  • Brokering
  • “Business opportunities”
  • Casinos, gambling or gaming
  • Check cashing services
  • Cigarettes, e-cigarettes, or vape shops
  • Coins, collectible currency, or autographed collectibles
  • Collection agencies
  • Coupons or rewards-points programs
  • Credit protection, counseling, or debt repair services
  • Debt collection services
  • Discount health or medical care programs
  • Debt consolidation services
  • Drug paraphernalia
  • eBay stores
  • eBooks (copyrighted material)
  • Electronics
  • Event ticket brokers (unlicensed or non-registered )
  • Exporting services
  • Extended warranty companies
  • Fantasy sports websites
  • Federal Firearms License (FFL) dealers
  • Finance brokers, financial consulting, or loan modification services
  • Furniture sellers
  • Indirect financial consulting
  • Financial planning, strategy or advising
  • “Get rich quick” books, programs, etc.
  • High average ticket sales
  • Horoscopes, astrology or psychic services, fortune tellers
  • “Hype” products or services
  • Hypnotists or self-hypnosis services
  • International merchants
  • International shipping, cargo, or import/export
  • Investment firms, strategy, or books
  • Life coaching
  • Lingerie sales
  • Lotteries or sweepstakes
  • Magazine sales and subscriptions
  • Mail or telephone order sales
  • Membership organizations (contracts over 12 months)
  • Merchants on the Terminated Merchant File (TMF) or MATCH List
  • Merchants with poor credit
  • Modeling or talent agencies
  • Multi-currency sales
  • Multi-level marketing (MLM) sales tactics
  • Music, movie, or software downloads or uploads (i.e., copyrighted digital products)
  • Offshore corporation establishment services
  • Pawn shops
  • Prepaid calling cards
  • Prepaid debit cards
  • Real estate
  • Replica handbags, watches, wallets, sunglasses, etc.
  • Self-defense, pepper spray, mace, etc.
  • SEO services
  • Social networking sites
  • Sports forecasting or odds-making/betting
  • Telecommunications
  • Telemarketing services
  • Telephone companies
  • Third-party processing, factoring merchants
  • Time-shares or time-share advertising
  • Tour operators
  • Travel clubs, services, or agencies
  • Vacation planners
  • Vacation rentals

Fees and Rates for High-Risk Credit Card Processing Businesses

If you are reading this page so far ,we are sure that your business is in the high-risk category.It’s time to face the bitter truth: merchant accounts for high-risk businesses actually cost more than those for non-high-risk ones. You’ll pay more in both account fees and processing charges.Some high risk credit card providers also bind you on long duration contracts.

While most non-high-risk businesses have some ability to negotiate the length of their contract terms, the industry average is around three years for the initial term, with an automatic renewal clause that extends it for one-year periods after that. These lengthy contracts have been very unpopular with merchants, and the trend within the industry is moving more toward month-to-month agreements so you can cancel your account at any time without being penalised. Unfortunately, high-risk merchants don’t have much bargaining power, so you can expect to be stuck with a contract running anywhere from three to five years, again with an automatic renewal clause that extends it beyond that initial time frame. Your contract will also usually include an early termination fee that applies if you close your account before the end of your contract term. If that’s not bad enough, you might even have a liquidated damages clause in your contract that raises the price of breaking it even further.

While the credit card processing industry is generally moving more toward lower monthly and annual account fees, you might not be so lucky as a high-risk merchant. You can expect that at least some of your recurring fees, particularly your basic monthly account fee, will be higher than what it would be for a non-high-risk business. This is all a reflection of the fact that your high risk credit card  processor is taking on additional risk by supporting your merchant account.

Another added expense that you’ll have to deal with as a high-risk merchant is a rolling reserve. While this requirement is sometimes also imposed on non-high-risk businesses who are startups, they’re almost always imposed on high-risk businesses. A rolling reserve is set aside from your sales’ processing to cover unexpected expenses such as chargebacks, and as a hedge against you suddenly going out of business. While rolling reserves decrease over time (and eventually go away altogether if your business is successful), they can present serious short-term cash flow problems and even force you out of business if you don’t manage them carefully.

Lastly, we always recommend that you review your contract thoroughly before signing up with any processor. While this advice is critical for any business, it’s even more important for high-risk merchants.

Avoiding Greedy High-Risk Credit Card Processing Providers

As discussed above, there are many merchant services providers who claim to serve the high-risk community, but actually charge highly inflated rates and fees to unsuspecting business owners who are desperate to get approved for a merchant account. Some high risk credit card providers will treat you fairly and charge you reasonable fees, there are other providers that are looking to take advantage of your plight.

It’s not always easy to distinguish the reputable high-risk providers from the greedy ones, but we can offer a few tips to help you avoid the latter:

  • Check their website: If their website layout looks very basic or dated, that’s a bad sign. Many greedy providers are small companies that don’t have the budget for a snazzy website, and a lot of them simply haven’t updated their site in years. A website that looks outdated should be your first clue that something isn’t right with the company.

  • Check their online reputation: You’ll want to research what others are saying about the company on the internet. If the reviews are bad, stay away. If you can’t find any reviews, that’s an even stronger indication that the company should be avoided. Also, don’t forget to check out consumer protection sites such as the Better Business Bureau (BBB) and Ripoff Report for feedback from merchants who’ve done business with the company.

  • Read their contract: Only few providers offer sample contracts online, but if you can obtain a copy of the company’s standard Terms and Conditions or Merchant Application, review it thoroughly.

Get pre-approved in as little as 6 hours.

We, at iPayTotal , assess each and every High Risk Credit Card Processing merchants individually, we study your method of doing business so we can board your industry with the acquirer that would be most suited and beneficial for your business.

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