What Makes A High Risk Merchant
A business isn’t able to operate without the proper methods of payment processing to keep up with sales. It won’t matter if you are a brick-and-mortar business or solely online, cash isn’t used as much as it once was and you can’t rely on people paying in cash with each transaction. You will need to accept different payment types in order to keep up with the demand of your customers. However, if you are identified as a high-risk account then you will need to implement high risk merchant processing solutions. There are different things that make your business stand out as high risk.
There are some industries that pose a larger risk than others. Some are based solely on the reputation of the business and some are its nature. For example, stores that sell firearms and adult products are likely to be rated as high risk. Others that are high risk include telemarketers, online auctions, travel services, dating websites, and bail bonds companies.
If Your Business Doesn’t See The Card
Those that operate using a card, not present transactions are at a higher risk for chargebacks and fraud. This includes online dating sites, online auctions, home-based businesses, and other online businesses. This is true even if your business offers real products but the payment processing for the products is done over the Internet.
Reputation For Frequent Chargebacks
If you have already experienced a large number of chargebacks in the past, whether it’s due to a bad batch of products, mistakes with your payment process, or other reasons, then you will be identified as a high-risk merchant and need high-risk merchant processing solutions until you are able to prove yourself.
Bad Personal Credit
Even if it’s not fair, your personal credit also has some standing on your business and the exposure of risk different processors feel the business represents. One of the things you can do to reduce your chances of being labeled a high-risk merchant is to build up your own credit score. You can do this by paying off debt, reducing your available credit utilization ratio, and working with a financial planner.
Merchant Account History
You need to have managed your account wisely in the past to avoid being a current high-risk merchant. You shouldn’t get an account that gives you more services than your business needs at the moment and it helps to stay up to date with all the requirements your current merchant service provider has.
Length Of Time You Have Been In Business
This can have a bigger impact than you think. A newer business may need to prove itself in order to get preferred rates. The longer you have been in business, the better you will look to merchant providers and the less risk you pose.
Even if you are a high-risk merchant, it is not the end of the world and it doesn’t mean that you will never be able to accept credit cards. There are high-risk merchant processing solutions available and, in some cases, these can work to get rid of your high-risk status.