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.