HIGH RISK MERCHANT ACCOUNT SPECIALISTS
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A high-risk merchant account is a merchant account designed for businesses deemed as high-risk businesses or operating in high-risk industries. Such business might include; betting or gambling businesses, adult entertainment businesses, bail bonds, auto rentals, collection agencies, businesses offering subscription services, and those in the medical marijuana market.
Multilevel marketing and many other such businesses where the customer is not physically present. Such businesses find it hard to get financial services directly through financial institutions thereby requiring high-risk merchant services. High-risk merchant services are provided specifically by companies tailored to offering those services but at an extra fee.
The business, therefore, pays for more than they would if they were operating directly with a financial institution. The best highly recommended merchant services, when provided, are unlike other merchant services as the service providers offer faster payouts, lower reserve rates and other benefits that will attract high-risk businesses.
A merchant account operates like a line of credit allowing the high-risk business to charge customers through credit and debit cards. In essence, however, it is a bank account just like any other and therefore offered by banks.
Are You A High-Risk Merchant?
High risk of credit card processing can be difficult, but it is not a death sentence for your business. Running any business nowadays give or take demands that you give your clients the option to pay with credit or debit card. In case you are an e-commerce entrepreneur, credit/debit cards are about the only option for getting paid. Although tiny businesses may get by with a payment service provider like PayPal or Square, once your company reaches a particular size, you are going to need to upgrade to a full-service merchant account. While it’d be fine if credit card processors treated all businesses equally, but the truth is they don’t.
Larger, higher volume businesses receive lower processing rates and frequently obtain more generous contract terms. Businesses can also be treated differently based on the degree of financial risk they present to their processor. All processors will carefully judge your business to determine if you fall in the list of high risk merchant class. If, for whatever reason, your company is determined to be from the list of high risk merchant class, the implications can be severe. Many high risk merchant processors will simply refuse to approve you for a merchant account, while others will charge you significantly higher rates and fees than you’d otherwise have to pay. Sadly, there are also a good deal of merchant services providers that intentionally market to high risk businesses which are fighting to get approved for a merchant account, just to rip them off with exceptionally high fees and rates, along with draconian contract terms.
Every business that applies for a merchant account is assessed for the level of risk that their business experiences. The level of risk has a dramatic effect on the processing rate that is offered to the business, and is usually centered around the amount of chargebacks that business receives offset by the volume merchants process each month. Chargeback prevention can go a long way towards helping you keep your chargeback rate much lower.
How to Find a High Risk Merchant Account Provider?
Accepting payments through credit cards has been part of the norm of modern business but if your business falls under the high risk category, finding a Best high risk merchant account provider can be challenging. Is it very important to get the right merchant account provider that will suit the business’ needs because a high risk business requires special attention in setting up a payment processing account because of the heightened risk that comes with the industry category of the business itself.
It is a must to find a reputable high risk merchant account provider that will process the credit card transactions of the business.
It is recommended to start the search for such a company online. It is possible to find a lot of information on the internet nowadays. From the internet, a list of the most favourable three should be taken. The three should then be qualified one after the other until the very best one has been found. The qualification process can be based on the following criteria.
Charges – The company with the least charges might not be the best perse, but it will help to keep the profits at a maximum. While deciding on the charges it is also important to consider the services being offered to determine if there’s value for money.
Services Being Offered – The other consideration should be on the services being offered. Different institutions will offer different services to their clients. For instance, some might have fast payouts for their account holders while others might not. The right company is the one that will offer the services tailored to meet the needs of the business.
Clear Communication – The company should also offer very clear communication regarding how their business is conducted. This should be given in writing. The company should indicate clearly how the payouts are made when they are made and the frequency of the payout.
Whether they have a reserve account, and all other important information regarding their operations are also indicated. All the charges to be incurred are also indicated.
For the application process to be smooth sailing, the applying business should ensure they have all the requirements at hand. The information provided should be clear and true. The business should also have all the funds required to start the account if any. It is possible for accounts to be denied when the applications are not made properly.
A genuine payment processor will not approve easily and will take time to review the requirements a merchant has submitted. Some of the requirements that may be obligatory to submit before a processor underwrites a high risk merchant business are as follow.
The bank that offers the high-risk merchant services is called the acquiring bank while that that offers the credit or the customer’s account is called the issuing bank. For the acquiring bank to safeguard themselves from losing a lot of money, there are several risk management features put in place. Here are some of those safeguards used.
Delayed Settlements – In this solution the acquiring bank holds the funds for a slightly longer period than for other merchant accounts. This is done to safeguard the bank in case of a fraudulent transaction.
Use Of Reserve Account – In this method the acquiring back uses a reserve account where a portion of the funds is held for a certain duration. For instance, the acquiring bank may hold 15% of the funds for a month to three months. This cushions the acquiring bank from losses in case certain issues were to arise. The money is passed to the business after the period has elapsed and the process repeats itself.
These safeguards are put in place to protect the acquiring bank as the monies being transacted in the account have a high chance of refund, fraud, chargeback or reversal. When this happens, the acquiring bank has to incur administrative charges to deal with the setbacks.
The very first thing to know about high risk merchant account is that your processor will determine if you fall into one of their elevated risk categories whenever you apply for a merchant account. Either you are high risk, or you are not – there isn’t any middle ground. Beyond this, it gets complex as each high risk merchant account processor has their very own distinct guidelines for determining whether you are at the high risk merchant class. While some business types, like pornography or drug paraphernalia will nearly always be set in the high risk merchant group, others might or might not be, dependant upon your high risk merchant account processor.
Some high risk merchant account processors have very strict guidelines for determining high risk status, but others use more relaxed standards. In case you are considering a certain provider, check their web site or contact them directly to see whether they find your company to be higher risk. This could save you plenty of effort and time at wasted applications to providers
It is a big task to search for the right payment processing company for high risk merchant processor for high risk merchants who have essentially almost the same needs as everyone
IPAYTOTAL continues to earn recognition among the best high risk internet merchant account providers in the business. We think our commitment to excellence and going the extra mile to exhaust every opportunity is our mantra. We strive to exceed expectations and utilize our expertise and competence to deliver unsurpassed customer satisfaction.
To find out more about High Risk Merchant Account Solution. Give us a call at +44 800 776 5988 or get in touch with us through our website. Even if you’re not a customer of ours, we want to help you understand the process so you can make the best decisions for your business. We believe transparency and proactive education is the best policy.