Significance of High-Risk Merchant Accounts & Payment Gateway Solutions for Businesses
Merchant Accounts are types of account that are approved by banks or financial institutions. These accounts allow the merchant to accept payments via credit cards and all, from the customers.
High-risk merchant Accounts are payments processing accounts for different businesses and are categorized as high-risk services by banks. Here, risks are calculated in terms of fraud and chargebacks. There are varieties of factors and elements associated with high-risk merchant account such as:
- Longer contracts
- Tiered pricing
- Chargeback Fee
- Automatic renewal clause
- Early termination fee
- Liquidated damages clause
- Keeping a reserve
- Account freezes and terminations/li>
There is a huge number of High risks merchant services providers. And the services offered by them include :
- Flexible solutions for businesses across all verticals.
- Prevention of Fraud and chargebacks
- Wide range of payment methods
- Credit Card processing
- Company and account registration
- Alternative payment options
What Makes a Merchant in Need of a High-Risk Merchant Account?
Whenever we read the term high-risk merchant account, a question haunts our mind, “Do we really need a high-risk merchant account?” I mean if it is associated with such high risks, then why do the businesspersons apply for it? Well! As we all know that everything created naturally or man-made must have a purpose. Let’s spend our precious time in targeting those purposes behind high-risk merchant account.
High-risk credit payment services seem to be quite tricky. However, this doesn’t mean that that you can’t say that it is impossible to get. There are many types of businesses where high risks are involved. High-Risk merchants don’t qualify traditional processing agreements. They are bound to stick in high-risk merchant services offered by acquirers and processors. They agree to pay for the associated liabilities. High-Risk services come with a high price tag generally. However high-risk merchant account is significant because it allows:
- Increased sales volume allowances
- Multi-currency options
- Recurring bills
In most cases, excessive Chargebacks results in the case of the merchant agreement. However, before issuing any sort of punishment, a chance is given to rectify the problem.
What are the Most Common Reasons a Business might need High-Risk Merchant Accounts?
The businesses where high risks are involved are categorized under this account. Here are some reasons where high-risk merchant account is needed:
- If the business is selling products online through eCommerce platform, then the high risk is involved as it is a Card-Not-Present account.
- High-risk merchant accounts are required for the business which falls under highly regulated industries. Such industries include tobacco, firearms, alcohol, etc.
- High risks are involved in information technology as there is a risk of theft of customer information. Information technology is a reputational industry and leakage of any such personal information may hamper the reputation.
- The business industry where high Chargebacks and frauds are accounted for. High-Risk Merchant Accounts are allotted where a high volume of identity theft. Chargebacks and account hacking are experienced.
- High-risk merchant accounts are also suspected where products and services are sold on continuity or recurring billing model basis. It may often happen that billing is done without the clients’ consent. This raises the number of Chargebacks. Too much-issued Chargebacks will automatically cease your(merchant) account.
- The merchant accounts for having a bad credit score. This is a no-breaker reason. Even banks are not willing to lend money to such accounts.
- How to Get Approved for a Merchant Account for High-Risk Business?
- More often, merchants think that they can easily get approved for a high-risk merchant account. However, this is a fantasy. Getting approved for a Merchant for high-risk business is not an instant task. It requires a precise method to reach the destination. An approval process is a witty one. To get approved for a Merchant Account again,
- You have to highlight the best features and characteristics of your business that are assumed to work best for improvements.
- Send a cover letter with details of the insights of the business like numbers of subject and object and other relevant information.
- The merchant should discuss all the productive points that make the business stand out such as proactive fraud monitoring and so on promptly and confidently.
- It will be a wise decision if you mention high trading volumes in a cover letter. Trading volumes affect the risk associated with the processing company. The chances of approval increase when a strong processing history is shown based on a lot of monetary transactions.
- Lastly, you have to create a planned and organized commitment to long fulfillment duration. Fulfillment duration refers to the time duration taken between payment collection to the time taken to deliver the relevant products and services. Higher fulfillment duration higher the risk of Chargebacks and thus affects the business poorly. It is suggested to choose a shorter duration to reduce the risk standing as obstructions in approving a Merchant Account for High-Risk Business.
Apart from these procedures, it is advisable to these strategies also — Do thorough research, Try to fix your credit score, be scrupulous and selective about whom you will sell your products and services, put your right impression on your customers, and don’t misrepresent your business and go to your contract thoroughly.