High Risk Merchant Accounts
17 Aug

By ipaytotal

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How to Find a High Risk Merchant Account Provider? Comments Off

How to Find a High Risk Merchant Account Provider?

What are High-Risk Merchant Accounts and How to Setup One?

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.

How To Easily Identify and Coordinate with A High Risk Merchant Account Provider?

  • Search via internet for the list of payment processors that handle card schemes or payment networks linked to the payment cards whether debit or credit card for the list of payment processors. Major card schemes are American Express, Diners Club, MasterCard, Visa, and Union Pay. Inquire with the sales team of the prospective payment processor. Provide them the following information – industry type of the merchant’s business, company website, the minimum and maximum ticket size and the fraud prevention steps of the company to prevent chargeback.
  • Businesses from within the same industry can also provide a source of payment processors since most of the company websites show the name of the payment processor of their business on the contact page.
  • Inquire about the charges and fees that come with the merchant account because it will definitely cost money to create one. Services rendered are paid although some merchant account providers seem to charge less to open an account but have higher fees for each card transaction. Fees associated with creating and using the merchant account must be analyzed and checked if the charges are reasonable or not.
  • The payment service provider should be able to offer as many payment types as possible to maximize sales because a merchant account is not only about accepting credit card or debit card payments.
  • The best provider must also be able to provide tools to secure the merchant account and can help in managing fraudulent transactions and chargeback and also help in generating customer profiles through the payment information of the customer.
  • The provider should be also able to provide excellent customer support both for potential and existing client and also have friendly fees to its client. It must be noted that if the provider is not willing to answer questions during the inquiry and have shown impatience or if it is unable to provide help, look for a better alternative.
  • There are providers who offer a demo for the evaluation of their services. This can help a lot in the decision in regards to the right provider to open a merchant account with.

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.

  1. A fully functional company website.
  2. The company website should be SSL protected.
  3. All policies including Terms and Condition, Refund Policy, Privacy Policy and Cookie Policy must be made visible on the company
  4. homepage header menu.
  5. The company’s customer support number and email must be indicated on the website’s homepage and contact page.
  6. There should be a list of products and services being offered by the company including the product and service details, price and the committed date of delivery or the subscription time.

Risk Management for High-Risk Merchant Services Providers

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.

High-Risk Business Categories

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


  • High Rate of Chargeback– If your business experiences chargebacks quite frequently, this is a red flag for merchant account providers. While this metric isn’t usually indicative of your company, it does tell the processor about the patterns of your clientele. If your clients have a history of chargebacks, then your business is most likely going to be considered high risk because it will require greater chargeback protection. Most low risk businesses have zero chargebacks per month.

  • High Rate of Fraud– If it’s common to see quite a few fraud transactions processed by your business each month, this is yet another way your business might be deemed high risk. Using only a virtual terminal and processing only card not present transactions in many cases will lead to the necessity of a high risk account.

  • Selling goods that walk the line of legality -If your business is selling goods that could be associated with illegal activity, you’re most likely going to need highrisk merchant account providers to process payments. If you sell Items like marijuana paraphernalia or elements from the pornographic industry, a high risk merchant account is potentially your only option to accept credit cards.

  • Offshore Businesses – If your business is located overseas but operates here in the United States, this is a huge red flag for the underwriters of merchant accounts. Without the ability to see and know all of the inner workings of your company, there’s really no way to be sure that your company is completely legitimate and trustworthy. That’s enough to push your business towards the high risk label.

  • Guilty by Association – If your business is commonly associated with the type of business that’s seen as a pyramid scheme or another type of a scam, high risk merchant accounts are probably your only option.

  • Merchants with Bad Credit – One of the determining factors for authorizing any merchant account is the credit score of the business owner. If your credit score is rated as bad credit, that reflects on how risky it is to authorize your business for a merchant account. If your credit score is really bad, even a high risk account may not be an option until you’re able to raise your score to a healthy level. While it’s not impossible to get an account with a payment processor with poor credit, it can prove more difficult.

  • High Average Ticket – If your business has a very high average ticket, you might need a high risk merchant account. If you think about a convenience store with an average ticket of $7, it would take many chargebacks to equal the same dollar amount of a single chargeback for an electronics store. If your average ticket is very high, this alone might push your business into the high risk category.

The high risk merchant  should also do the following to be able to assess well which is the best merchant account provider for the company.
  1. Read the fine print of the rates and fees. This is very necessary to be able to get the accurate rate quoted by the payment processor. An accurate rate is needed to be able to compare the rates offered by several processors. A low rate doesn’t necessarily mean a low overall cost. Sometimes these low rates come with hidden fees. So a merchant must be wary of this fine print or hidden clause in the proposal and contract. It is better to find a payment processor that is transparent with their fees to avoid the bill shock.
  2. Choosing a processor is not based on the rates alone but is also determined by many other factors that affects how the business is run such as security and technical support among others.
  3. The security and fraud protection of the merchant account must be of utmost importance. Data breaches have become prevalent and have hit small and large scale retailers. That is why customers are now after the best protection a processor can offer where proactive fraud prevention is sought to by the processor.

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

What qualities to look for in the evaluation of the best high risk merchant account provider?

  • High-risk specialization. This involves more than just marketing toward the high-risk sector. A true high-risk merchant account processor will have a sales staff (preferably in-house) that’s trained and experienced in dealing with high-risk merchant accounts. Similarly, their customer service staffs will also be trained in working with high-risk merchant accounts.
  • eCommerce support. If your business has an online presence, you’ll need a payment gateway to process your sales transactions. You might also want a virtual terminal to go with it, as this will allow you to input card-not-present transactions from any internet-connected device with a web browser. Card readers that connect to your computer via USB or Bluetooth expand the usefulness of a virtual terminal by allowing you to process card-present transactions as well.
  • Sales and advertising. Misleading sales tricks and dishonest sales agents are common problems in the high risk merchant account provider industry. While we like to see full disclosure of contract terms, processing rates, and account fees right on a high risk merchant account provider’s website, even the best high-risk merchant account providers often fall short in this area. There’s a reason for this. Many High-risk merchant account providers often work with multiple third-party processors to find one that can accommodate your needs. With each processor setting their own rates and terms, it’s practically impossible to mention out all the details on a website. A high risk merchant need to work closely with the sales representative of the high risk merchant account processor and negotiate to get the best terms available. Kindly be aware that as a high-risk merchant you’re not going to get as good a deal as a non-high-risk merchant.
  • Pricing. Costs associated with maintaining a High Risk merchant account include both processing rates and account fees. Processing rates are assessed on a per-transaction basis, while account fees are billed monthly or annually. As a high-risk merchant you can also expect to pay higher fees than a non-high-risk merchant would. For a more detailed look at rates and fees, kindly visit our website www.ipaytotal.com
  • Customer support. This is a challenging area for many high risk merchant account providers, especially when trying to provide 24/7 support by phone or email. Many of the high risk merchant account providers are increasingly putting more self-help resources on their websites, including tutorials and articles explaining in detail how their services work. This allows high risk merchants to solve some of the simpler problems so that support staff have time to deal with more complex issues. While some providers offer better customer service than others, we at ipaytotal outshine our competitors with par excellence.

High Risk Merchant Account Solutions With IPAYTOTAL

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.


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