BluePay is pleased to bring you this valuable information from our partner, Due, makers of a free digital wallet that allows users to easily make and accept payments online.
When you hear that your business is high risk and you either can’t get credit card processing assistance, or it’s expensive, it may make you feel like someone who has tarnished credit. It’s like you did something wrong and your options become limited. While it may seem alienating to be considered a high-risk business, there are ways to create a positive and affordable credit card merchant processing experience so you can leverage the increased opportunities for more customers with this additional payment method for online transactions.
Factors That Make You a High-Risk Business
Specific business segments have been identified as being high risk due to the nature of what they sell in terms of products or services. Some examples include:
- Multi-level marketers
- Online pharmaceuticals and nutraceuticals
- Online gaming
- Subscription-based services
- Adult products or services
- VOIP or telemarketing
- Bitcoins or Forex trading
- Online stores on sites like Amazon and eBay
- Any other type of product or service that could be considered illegal or not approved in all states and countries
There are many other examples of industries and business niches that fit this category, but this list provides a general idea.
Besides the red flag that a certain industry may cause to put you in the high-risk category, there are other factors that make you a high-risk candidate:
- You deal in multiple currencies.
- Your average transaction is considered larger than average.
- You are an international business that works in countries with high numbers of questionable transactions, chargebacks, fraud and illegal activities.
- You are a new business with little to no credit card processing history.
- You have a high chargeback ratio.
- You have been listed as a terminated merchant by a previous credit card processing company.
- You have bad credit or a low credit score.
With so much other available credit card processing volume out there, most merchant services providers do not want to bother with any high-risk business.
Strategy for High-Risk Credit Card Processing
There are a number of things you can do to secure credit card processing for your high-risk business. Illustrating that you have significant capital resources (also known as a rolling reserve) goes a long way with banks that are then more willing to provide you with payment processing services. They won’t be concerned about any financial issues in regards to covering fees or financial risk associated with your industry.
However, not every small business can say they have significant capital resources at their disposal. What then? Since a bank may not approve your business for a merchant account without this capital to tap, you can turn to a credit card processing company or certain credit card merchant services providers that do high-risk credit card processing. With the increasing number of high-risk merchant payment processors now available to meet the growing demand for their services, you can take your time and select the one that most closely understands your needs, including any type of specialization in your particular high-risk industry.
Considerations should include how long the high-risk credit card merchant processing company has been in business, how others have fared using a particular payments provider, what type of volume they cover, and what other types of services they include that can help you avoid some of the reasons you are considered high risk like a greater amount of chargebacks and fraudulent transactions. These tools might include things like chargeback and fraud alerts to proactively limit this type of activity, compliance and regulatory tools, and additional layers of security.
Also look at the types of fees and the amounts that a high-risk credit card processing company requires. This is where it really pays to shop around and compare potential payments partners to see if you can find the right combination of costs, features, and sensitivity and understanding of your particular type of high-risk business. It’s particularly helpful to identify a credit card processing partner or top payments company that can help you develop and implement an effective chargeback and fraud management program that includes educating all involved on what types of fraud is committed, what things to look for that can be construed as suspicious activity, how to mitigate that risk, and how to incorporate more security features to protect your business and customers.
With knowledge and research under your belt, you should be able to leverage all of the benefits of credit card merchant processing for your business and build up a solid reputation with your customers and industry as a reputable company that delivers an exceptional experience, excellent products or services, and secure payment processes.