What is a high risk merchant account?
A high risk merchant account is a merchant account for organizations that fall under the category of high risk businesses. For most high-risk businesses, getting approved for a high risk merchant account with regular processors can be quite difficult and disappointing. Credit score to industry type can sort you as high risk. The experts at iPayToTal can help you set up a low to high risk merchant account for your B2B, eCommerce, and retail business. iPayToTal gives your business access to their assorted portfolio of banking connections to guarantee we get your account placed. Difficult to place is now a thing of the past. Begin accepting payments today – for basically any business type or risk profile at reduced rates and fees. iPayToTal, an expert in providing High Risk Merchant Account Solutions.
As experts in challenging and difficult-to-place merchants applying for payment processing, we’re here to get your business pre-qualified and approved with a high risk merchant account and the best UK, US and International banking solutions provided explicitly to your business needs.
High-Risk Business Categories
The first and most important thing to understand about high-risk businesses is that your processor will decide if you can be categorized as one of their high-risk categories when you apply for a merchant account. It is possible that you’re high-risk, or you’re not – there is no middle ground. Past that, it gets more complicated as each processor has their very own guidelines for deciding if you’re in the high-risk category. While some business types, for example, pornography or drug paraphernalia will quite often be put in the high-risk category, others could conceivably be, depending upon your processor. Some merchant services providers have exceptionally strict rules for deciding high-risk status, while others utilize increasingly loosened up criteria. In case you’re looking at a specific provider, Choose iPayToTal as we make credit card processing easy for all types of high risk businesses.
How a merchant services provider perceives a high-risk business can also differ generally. Most of the providers, especially those that attempt to offer merchant services at the lowest possible costs, essentially don’t acknowledge any high-risk businesses at all. This decreases their exposure to fraud and minimizes expenses for their current customers. Other providers will permit certain high-risk companies, however will charge you essentially higher rates and fees for your merchant account because of the elevated risk they’re accepting by giving you a merchant account. There’s also a third category of providers who have some expertise in setting high-risk businesses. While their rates and fees aren’t a good deal for non-high-risk merchants, they can often provide a merchant account to high-risk businesses that have been turned down by other providers.
Characteristics of High Risk businesses
While the correct criteria for deciding high-risk status vary from one provider then onto the next, the accompanying factors are normally used to decide if a business qualifies as high-risk:
- High chargeback or fraud rate: If your line of business has a history of a high rate of either chargebacks or outright fraud, you’ll likely to be considered high-risk, as well. This decision is usually based on the behavior pattern of your clients, not you personally.
- Offshore businesses running in the United States: If your business is headquartered abroad, yet you essentially sell to US clients, you may be flagged as high-risk. While the potential for fraud is a deciding factor here, lax banking regulations in your home country can also be a deciding variable.
- Products or services of questionable legitimateness: This factor is the one the vast majority connect with high-risk businesses. Distributing pornography or selling drug paraphernalia are the most evident models, however, there are numerous others also.
- Dubious sales and marketing practices: Is your business the sort that is frequently thought of as a scam? Assuming this is the case, the standard of guilt by affiliation is alive and well, and most providers will mark you as a high-risk business.
- Bad personal credit: While most criteria for deciding high-risk status center around your business, this one focuses on you, the entrepreneur. If for reasons unknown, you have a low personal credit rating, you’re bound to be put in the high-risk category by a few processors.
- High average ticket sales: If your business routinely acknowledges unusually high-cost buys by means of credit card, you could be viewed as high-risk. This factor fundamentally affects organizations, for example, furniture stores and companies who process a ton of B2B transactions.
What If My Business Has Different Characteristics?
If the nature of your business falls under the high-risk categories, there is no compelling reason to stress. E-Commerce risk factors are diverse with each bank and there are custom solutions for most of the merchants. The above attributes are only rules to pursue while deciding your risk factor.
Other Things To Consider
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AdultAuto Parts & Accessories
Airlines or airplane charters
Attorney referral services
Casinos, gambling or gaming
Check cashing services
Credit protection, counseling, or debt repair services
Diet & Weight Loss Programs
Travel clubs, services, or agencies
VoIP services Nutraceuticals/Herbal Supplements
Off-shore corporation establishment services
Online Gaming & Casinos
Precious Metals, Coins
Prepaid calling cards
Prepaid debit cards
Debt consolidation servicesDrug paraphernalia
Exporting services (non-US based)
Extended warranty companies
Fantasy sports websites
Federal Firearms License (FFL) dealers
Finance brokers, financial consulting, or loan modification services
Financial planning, strategy or advising
Horoscopes, astrology or psychic services, fortune tellers
International merchants (non-US based) operating in the United States
International shipping, cargo, or import/export
Investment firms, strategy, or booksLingerie sales
Lotteries or sweepstakes
Magazine sales and subscriptions
Mail or telephone order sales
Membership organizations (contracts over 12 months)
Merchants on the Terminated Merchant File (TMF) or MATCH List
Merchants with poor credit
Modeling or talent agencies
Music, movie, or software downloads or uploads (i.e., copyrighted digital products)
Non-US citizens doing business in the United States Replica handbags, watches, wallets, sunglasses, etc.
Self-defense, pepper spray, mace, etc.
Social networking sites
Sports forecasting or odds-making/betting
Chargebacks in High Risk Merchant Accounts
Some of the common reasons behind chargebacks If you have been doing business for some time and have changed your past credit card processing service, at that point your business could be viewed as a high-risk business if you had such a large number of chargebacks with your past credit card processing service and put on a “match” list for excessive chargebacks.
Here are some reasons why you may have encountered various chargebacks:
- Customer didn’t identify the descriptor on their credit card statement.
- Customer encountered purchaser’s regret since it’s a big ticket purchase ($1,000 to $10,000).
- Customers were not able to remember that they made a purchase.
- Customers claim your products fall short of concerning publicized advantages.
What you can do about it
There are four things you can do to change your status as a high-risk merchant.
Generally, a chargeback is a client demanding that your business has unjustifiably charged them. React to these cases with some verification that the transaction was a valid one. For example, if a client demands that they didn’t start the transaction in any case, at that point you must show evidence that it was them. If the transaction was on the web, you can indicate records of the order or logs of the client’s IP address showing that they visited your site. If the transaction was in a physical store or office, show their signature on the credit card receipt. If you have a business where chargebacks are normal, state you make customized products and there is quite a while slip by between when a client puts in a request and when they get their stock, at that point, you should keep careful records of the transactions with the goal that you can question any cases. This is a typical issue for businesses that make suits, build furniture, or give travel services.
Find out why you’re receiving a higher than average chargeback
Sometimes the problem might be anything but difficult to address. It might be something as basic as the descriptor on your credit card does not match up with your business name. Accordingly, the clients don’t identify that they made a purchase from your business.
Get reclassified as a low-risk business
Sometimes banks will even acknowledge your business however request for a lot higher processing rate, demanding that they are taking on a risk. So as to be reclassified as a low risk, build up a positive history after over time, which is typically a six-month duration where you have a low rate of refunds and chargebacks, normally below1% of your aggregate transactions.
Find a trusted business partner
Some merchant account providers will work with high-risk merchant accounts while charging sensible rates. You may need to utilize these services in the event that you are classified as a high-risk merchant for no blame of your own. For example, you may simply be a start-up with no past credit history or a manufacturer of items that just suit the explicit needs of clients in another country.
Fees and Rates for high risk merchant account solutions
Merchant accounts for high-risk businesses unavoidably cost more than those for non-high-risk ones. Indeed, they, as a rule, cost significantly more. You’ll pay more in both account expenses and processing charges, and you’ll likely be stuck in longer contracts too.
While most non-high-risk businesses have some capacity to bargain the length of their agreement terms, the industry average is around three years for the underlying term, with an automatic renewal clause that broadens it for one-year time spans after that. These extensive contracts have been exceptionally disliked with merchants, and the trend inside the business is pushing more toward month-to-month agreements so you can drop your account whenever without acquiring a penalty. Sadly, high-risk merchants don’t have much (assuming any) negotiating power, so you can hope to be stuck with a contract running anywhere in the range of three to five years, again with an automatic renewal clause that broadens it beyond that initial time frame. Your agreement will also include an early termination fee that applies if you close your account before the end of your contract term. If that is not sufficiently awful, you may even have a liquidated damages provision in your agreement that raises the cost of breaking it much further.
While the processing business is commonly pushing more toward lower month to month and yearly account expenses, you won’t be so fortunate as a high-risk merchant. You can anticipate that at least some of your recurring fees, especially your essential month to month account charge, will be higher than what it would be for a low risk business. This is all a reflection of the fact that your processor is taking on additional risk by supporting your merchant account.
Higher processing costs are additionally an unfortunate reality for high-risk merchants. While we normally prescribe an interchange-plus pricing plan for most organizations, you’re unmistakably more probably just to be offered a more expensive tiered pricing plan. Regardless of whether you are offered an interchange-plus plan, hope to pay both a higher rate markup and a higher per-transaction charge. While the genuine rates will differ broadly starting with one processor to the next, as an extremely broad guideline, you can hope to pay near twice as much as what a comparable non-high-risk business with a similar processing volume would pay. In case you’re offered rates that are much higher than this, you ought to presumably look somewhere else.
Finally, we always recommend that you audit your proposed contract altogether before joining with any processor. While this counsel is basic for any business, it’s significantly more important for high-risk merchants. The fine print in your agreement may contain the most critical signs that you’re going to work with a predatory “high-risk specialist” provider who will charge you considerably higher fees and rates than you’d regularly need to pay as a high-risk merchant.
We Specialize In:
High-Risk Merchant Accounts – High-Risk Credit Card Processing – High-Risk ACH Processing – High Volume Merchant Account
What To Look for in Your Merchant Account Provider
In any vendor/client relationship, vetting research is time well spent. By looking into each potential partner’s qualifications and experience, you can ensure your financial investment will not be misspent. Merchant services are an area of your business that should not be overlooked in this regard. In this post, we review questions to ask before hiring a merchant services provider. In addition, we cover certain qualifications that will help your business be more successful.
In any merchant/customer relationship, screening research is time well spent. By investigating every potential accomplice’s capabilities and experience, you can guarantee your financial investment won’t be wasted. Merchant services are a zone of your business that ought not to be ignored in such a manner. In this post, we survey things to ask before procuring a merchant services provider. Furthermore, we cover certain capabilities that will enable your business to be more successful.
Vetting a High Risk Merchant Account Provider: Characteristics to Prioritize
Reputation and Reliability. Your high risk merchant services could involve a large number of dollars, so your seller must have a reputation for security. The merchant provider’s capacity to deal with your credit card transactions by means of a safe payment framework is characteristic for the accomplishment of your business. Reputation counts. Make certain to request and catch up on references. Talk with past and current customers of every high risk merchant account provider you’re thinking about.
Experience. It benefits you to know how much experience the service provider has in the business. Years of experience, for the most part, demonstrate top quality service and all around earned client trust.
Service Fees. It was once comprehended that merchant account providers would charge higher rate expenses for high-risk businesses. The thinking was that they needed to compensate for potential misfortunes later on. Luckily, nowadays it is commonly accepted that merchant account service providers should work in light of a legitimate concern for the customer. While choosing a high risk merchant services provider, competitive service fees, and don’t hesitate to ask each provider why they are charging higher fees for certain services.
Security. Security is a genuine thought. You have a need to ensure that your online accounts and sales systems are secure, and you ought to have an arrangement in the event that something turns out badly. Make sure to discover what sort of security your merchant services provider uses. Is information encoded? How does the merchant services provider handle stolen credit cards? These and different request can enable you to see how genuinely every potential accomplice takes security.
The Benefits of Working with Experts. iPayTotal is a pioneer in giving financial and business services to high-risk businesses, with a special focus on the cannabis industry. Our fundamental beliefs incorporate transparency, credibility, and legitimacy —all sponsored up by our world-class support.
iPayTotal works with the best experienced and well-educated team, who have many years of experience in providing the best High Risk Merchant Account Solutions in the industry. Their main aim is to secure you from fraud services. We are dedicated to value your customers more than they demand. You can enjoy and benefits from our services. For more details regarding the company, you can follow our website portal at your convenience. Our highly skilled professionals will assist you throughout your process.