Undoubtedly, finding out your company is deemed high-risk might sound scary, but it's much more common than you'd expect. Most of us have dealt with high-risk merchants at some point. Besides, we have likely done so in the last week.
The high risk merchants account is one your payment processor has designated as having a higher probability of fraud or chargebacks occurring from your business. Payment processors take on more risk when processing high-risk merchant accounts, so they need to charge higher fees to compensate for the risk they are taking on. The following article provides essential tips to keep in mind when choosing high-risk merchant accounts for your business.
What Is A High-Risk Merchant, And What Mistakes To Avoid While Choosing It?
High-risk merchant accounts are special accounts explicitly created for businesses considered high risks. These merchant accounts provide companies considered high-risk with an opportunity to accept credit cards just like any other business.
Unless you have a high-risk merchant account, your processing markups are higher than they would be if you had a low-risk merchant account, as processors might want to use more money to protect themselves if something goes wrong. Here are the top mistakes to avoid while you select a high-risk merchant account.
- Payment Options Are Limited
Convenience is of utmost importance to customers. To protect it, they will go to great lengths. Approximately 75% of customers will switch to a competitive company if they find that the company is easier and more convenient than the one they are currently dealing with.
The worst thing you can do to inconvenience your customers is to make them wait while they make their payment. Today, 87% of consumers place more value on convenience than security when purchasing.
Whether a buyer is excited to buy or wants to get it over with, they get frustrated when a service provider doesn't accept their preferred payment method, such as a credit card, digital wallet, mobile wallet, or bank transfer, which complicates the buying process.
You should select a payment processor that offers you a wide range of payment options so that you are open to more than a small number of choices that will be available to you at the time of your payment.
- Ignoring Extra Charges
It is common for people to overlook additional or hidden fees when choosing a payment processor and, as a result, assume that the one with the lowest transaction fee is the one that is the most cost-effective.
As an issue with that approach, it is essential to consider that a great deal is happening underneath the surface. For example, the processing fees that payment processors charge for certain cards may be high sometimes. The agreement may also have additional fees that seem small on their own, but when added together, they create a high cost to your company.
- Support And Assistance Previously Provided
Regardless of your business's length, working with a payment provider who can offer assistance and support when needed is still essential. In addition, getting your merchant account set up requires assistance and support from a merchant account specialist if you are a new business.
Fraudulent credit card transactions and identity theft are rising, and merchants must prepare themselves with security measures to keep their businesses safe. If you choose a payment processor that does not support your data security, it doesn't matter how impressive their technology is if they do not offer the latest products
- Easy Onboarding
When choosing a company to set up a new account with, make sure they not only make it easy to set up a new account but also offer round-the-clock support for the transaction and technical help throughout your entire relationship with them.
- A Processor With A Limited Number Of Options
When choosing a suitable payment processor, sellers have to make sure that they pick one that provides them with several options to choose from regarding payment methods. The choices that you make will depend on the kind of processor that you prefer.
Most of the payment options available on the market can be processed by processors with most of the payment options. Although as we mentioned earlier, there are different types of payment processors, and some of them offer only a few options and are better than others.
What Makes A Merchant A High-Risk Merchant?
Merchant accounts are usually regarded as high-risk by payment processors because of a variety of reasons. Some typical reasons for the difference between one processor and another can vary, but some of the most common ones include the following:
- A Credit Score Is Low
Poor credit scores indicate that an individual or company has not paid on time or has a bad credit history. Therefore, a payment processor might label you high risk if your credit score could be better.
- A New Player In The Market
A merchant who has never used a payment processor before or has processed a small number of transactions may be considered risky. It is because the payment processor needs more information to verify the transaction. Merchants in business longer pose a lower risk to payment processors, reducing their risk of being branded as high-risk.
- The Industry With High Risk
Even merchants with excellent credit scores and business histories can be deemed high-risk. These companies operate in high-risk industries, such as high chargeback rates or fraud risks. Often, subscription-based companies are labeled risky due to the increased chance of customer chargebacks.
- Transaction Volume Is High
Payment processors have varying definitions of a high volume of transactions, which differs from one. Therefore, if a payment processor sets a limit on your daily spending and you exceed that limit, you may be at risk of receiving a high-risk merchant tag.
- Payments Abroad
If you sell products or services to customers in different countries and your products or services may have a high risk of being counterfeit or tampered with, you may be considered high-risk. It is known as a high-risk country if it is not Australia, Japan, Canada, the United States, or any of the European countries.
For every online business, a payment processor is necessary. However, choosing the right one can be more challenging if you're considered a high-risk merchant. Although it may seem wrong, it will not damage your reputation, which may be possible with cannabis affiliate marketing.