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Monday, December 6, 2021

Everything You Need To Know About High-Risk Credit Card Processing

Are you running a business that faces frequent cancellations and chargebacks? In that case, you might need a high-risk credit card processor to mediate transactions. But, choosing a high-risk card processor is not an easy task, especially if you are new to the business.

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If your business is a high-risk one, Shark Processing can help you save it from frauds and cybercriminals.

What is a High-Risk Business?  

A payment processor will provide you a merchant account. It is where transactions from your credit and debit cards get deposited before they reach your business bank account. 

A high-risk merchant account is a secure and advanced form of a merchant account that saves you from scammers. 

Before you get your high-risk merchant account, know whether you need one. 

An underwriting procedure with the high-risk credit card processor is mandatory when you apply for a high-risk merchant account. Based on your business profile and tax details, the processor will decide whether to approve your request for a high-risk merchant account or not. 

Payment processors look for a few factors to decide whether yours is a high-risk business. Some of these factors are: 

  • Account History:  Businesses have merchant accounts to mediate transactions. But, what makes yours a high-risk one? If your account history has chargebacks and cancellations with your previous provider, then the processor will identify your business as a high-risk one. 
  • Experience: Another factor that decides whether your business is a high-risk one is the number of years. A business that has been in association with payment processing for a long time is comparatively at a lower risk level. 
  • The Headquarters of your Business: If you have most of your customers from one province, but you operate from a headquarters miles away, your business is a high-risk one. 
  • Products or Services that are Questionable: If you sell or market illegal or prohibited products, then your business will get the high-risk tag. 
  • High Payment Amounts: If your purchase amounts are high, the processor will consider your business a high-risk one.

Some examples of high-risk businesses include pawn stores, e-cigarette companies, and escort service providers. 

Why do You need a High-Risk Credit Card Processor? 

As the sales of your high-risk business go up, you get closer to getting scammed. A high-risk merchant account is essential to make your transactions safe and secure. A processor will connect you with your customer through the high-risk merchant account.

A few facts that you should know about a high-risk credit card processor: 

  • The high-risk credit card processing company accepts that it is liable for all the risk factors. 
  • The high-risk processor performs several functions to ensure fraud management. 

If you are a high-risk merchant, the whole payment process can be expensive for you. It is because there are middlemen involved in the processes and they protect your transactions.  

Things that You Should do

To make a high-risk processor help you, you can do a few things from your side. 

  • Being honest with the processor about your account history can help. 
  • Make the processor understand your services and business background. 
  • Try managing your sales efficiently. 
  • Try negotiating with the processor after giving them enough time to understand your needs. 

What to Look out for in a High-Risk Payment Processor? 

Choosing a high-risk credit card processor that will take care of your business needs requires a little effort from your end. 

Rates and Fees. 

Generally, a high-risk merchant account will be expensive. It is because the processor puts themselves at risk to bring maximum profits to you.  There are some basic fees that you have to pay for a high-risk merchant account.

  • Setup and Registration Fee:  If your business profile gets approved for a high-risk merchant account, you will have to pay an amount to set up and register your account. Registration is essential for your business to be able to accept credit and debit cards. 
  • PCI Compliance Fee: Your high-risk credit card processor should be PCI compliant. It means that they are registered. You will have to pay a fee if they offer services related to that. 
  • Service and Maintenance Fees: You will have to pay for the service that the processor is rendering. To maintain the profit rate and to monetize your sales growth, you should pay a maintenance fee. 
  • Statement Rate: You have to pay a fixed fee for the company to send you statements every month. 
  • Interchange Fee: The amount of money that you have to pay for every transaction. 

Apart from these, you may have to pay chargeback fees and termination fees. It depends on the company and your business profile. 

The Business Model of the Company 

Choose a payment processing company that has a business model that suits your business needs. High-risk payment processing companies have a clear picture of their working model. Ask questions if you do not understand anything about their method of service. 

Also, the reputation of the company is a thing to note. If a company has some experience in the field, your work will become easier. 

Technological Assistance

Technological support will not only improve the client-provider relationship but also make the process transparent and efficient. Technological advancements like digital wallets have made payment processes easier for customers. 

The Service Quality 

The quality of service of the company depends on their responsiveness and level of understanding of your business. If a company tries to get into a long-term contract, then do not go for it. 

A contract can limit the service options. A high-risk business is prone to constant changes. So, choose a company that doesn’t make any contractual agreement with you. 

Customer satisfaction is another major factor that decides the service quality of the company. The company should offer to answer your questions before negotiating the fee. 

The Time Duration and Company Schedule

Ask your processor about how long it will take to create and register your account. You can develop your business only if the processor’s schedule aligns with yours.

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Keep track of your company’s progress after every deal to make the maximum out of your business. 

Bottom Line

Keep in mind that you want a high-risk processor to benefit your business

Consider knowing the details about a company before choosing it to manage your business and mediate your transactions.

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Josie Patra
Josie Patra is a veteran writer with 21 years of experience. She comes with multiple degrees in literature, computer applications, multimedia design, and management. She delves into a plethora of niches and offers expert guidance on finances, stock market, budgeting, marketing strategies, and such other domains. Josie has also authored books on management, productivity, and digital marketing strategies.

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Business Upside eMagazine