The reliance on online service providers to fulfill our day-to-day needs is growing. As a result, many people are now more inclined towards making digital payments. With a growing increase in digital payments, many businesses are looking for credit card processing solutions that are budget-friendly.
Even service providers understand this need and are responding to it accordingly. However, an important thing to keep in mind is that most businesses belong to high-risk sectors. Therefore, they have a higher risk of fraud and chargebacks, which is a concerning point for payment service providers.
So, if your business is in the “high-risk” category, then finding the right payment processor can be challenging. But what are the major factors that determine the risk? Let’s go through the risk factors that put your business at high risk in this article to give you a better idea about it.
How Can You Define a High-risk Merchant Account?
Before we find out about the factors that can lead to a high-risk merchant account, we need to know what it is. Every business can accept online payments, but there are a few that have a higher chance of chargebacks or fraud. While there are certain characteristics as well, these two are most common.
But, keep in mind that the payment industry doesn’t have any framework or central authority that will associate the risk factors with a particular business or sector. Rather, each commercial entity, including the payment processors, has its own criteria. So, you would have to check with the relevant organization.
A few solution providers would clearly mention that they don’t service particular industries. On the other hand, others will ask the business to provide complete details. Either way, it would come down to the payment processor’s internal criteria and requirements that they have set to determine the risk.
Critical Factors That Help Assesses Whether the Merchant is High-Risk
There are a few businesses in specific industries that naturally have a higher risk. Therefore, they can be categorized as high-risk companies. Below are some high-risk industries:
- Online gambling, Forex, Crypto
- Adult entertainment
- CBD (Cannabidiol), tobacco, e-cigarettes, etc.
- Stun guns and Tasers
- Credit Repair
- Multilevel Marketing (MLM)
- Adult products/services
- Supplements and nutraceuticals
- Tech support
- Search Engine Optimization (SEO) services
Apart from these, there are other factors as well that can be termed for high-risk businesses. A few processors would consider you a high-risk business if you have just entered the market with no history of payment processing. In addition to that, there can be other factors that can put you on a high-risk business list.
This could include poor credit records, low credit scores due to failure to repay the debt, etc. It is also the case for any business that has a controversial line of products. In addition to that, businesses that rely on international sales can also fall under the high-risk category.
This is mainly due to the highly volatile geopolitical situations along with the economic dynamics in the international market. Apart from that, industries that are regulated with legislation will also come under the “high-risk,” umbrella. These are just a few factors that can allow you to qualify as a high-risk merchant.
How to Get a High-Risk Merchant Account?
Now that you know what a high-risk merchant account is, you might be wondering how you can get one. After all, the high-risk merchant account allows you to collect payments through debit and credit cards even if they are deemed high-risk.
The first thing is that it is not going to be as difficult as it would be. And there are various approaches that you can go for. Getting a merchant service provider that focuses on high-risk accounts is a primary approach. They are connected with institutions and payment processors that are willing to work with high-risk enterprises.
You can also work with a standard merchant service provider. But make sure to inform them that your account is classified as a high-risk merchant account. This way, they would be able to come up with a solution that can suit your particular business. These are some approaches to getting a high-risk merchant account that you can use to meet your business needs.
The main aim of this article was to help you get a clear idea about how you can get a high-risk merchant account. Also, you would now know that the term “high risk” would have a different meaning for each merchant and processor.
Nevertheless, there are payment processors, such as Pay.cc who are willing to help you out with it. You can get a high-risk merchant account through them to provide your customers with the convenience of making payments via their debit/credit cards or other online payment vendors.