A high-risk merchant account is like your daddy – it demands a lot but safeguards you at every step of your business life. According to ClearSale, 30% of customers file chargebacks because their purchase was done using a stolen card! Similarly, 26% of customers do it because their products never arrive while 15% of them get the wrong products.
There are some crucial aspects about high-risk payment processing, good and bad, but definitely more of the good ones, which you must know –
1. The Basic Idea Behind a High-risk Merchant Account
High-risk merchant services involve an account for high-risk merchants who own businesses that impose certain risks on the banks. Merchant account services generally levy higher fees to ensure recovery from chargebacks. As a merchant, if your business is prone to chargebacks, you might get a rolling reserve for your account. This amount is meant to compensate for the potential chargebacks or frauds which your business might suffer. This can be done even if your past demonstrates numerous chargebacks or refunds.
2. Low-Risk and High-Risk Merchants – The Differences
Before opting for high-risk merchant processing, it’s important to be aware of the nature of your business. Does it fall under the high-risk business category? What if it’s a low-risk business? You’d only need chargeback management integrations if your business boasts the required eligibility criteria.
Let’s understand the differences with the help of a comparative study:
Low-risk enterprises generate less than USD 20,000 in terms of the average monthly sales.
High-risk enterprises see their average monthly sales cross the USD 20,000 mark on most occasions.
Low-risk merchants are generally indulged in selling low-risk items such as books, apparel, groceries, etc.
High-risk merchants usually trade software and digital products, seasonal goods, and other risky businesses.
Low-risk merchants have their businesses based in low-risk countries like EU nations, the USA, Canada, Australia, Japan, etc.
High-risk merchants conduct business with countries that are known for higher fraud potential.
Low-risk merchants have a negligible or no history at all when it comes to chargebacks.
High-risk merchants are known to have a bad credit history and an excessive number of chargebacks in the past.
Low-risk merchants generally don’t offer recurring payments.
High-risk merchants offer recurring payments.
Low-risk businesses accept only one currency.
High-risk businesses accept multiple currencies.
Low-risk businesses concede less than USD 500 worth of credit card transactions on average.
High-risk credit card processing transactions exceed USD 500 on average.
3. The Farsighted Advantages of High-Risk Merchant Account Services
Obviously, high-risk merchant services come at a high cost. But that’s the point, right? At most, merchants will have to shell out a fixed amount as a reserve for the banks. That’s it – no more cons or limitations here. However, when it comes to the benefits, there are many which come along with high-risk merchant account services.
Entering the Global Markets
Merchants owning high-risk businesses can enter global markets with the help of certain high-risk merchant account attributes. For instance, you can accept multiple currencies and strike deals with foreign entities from countries other than the low-risk ones. This can result in access to larger markets for you.
This high-risk merchant account feature helps you safeguard your business in case it suffers from chargebacks. Merchants who don’t have accounts with high-risk payment processing services enabled may face termination. As a result, their credit card payments might go through a substantial stoppage. Hence, it’s essential for them to avail high-risk merchant account solutions. Whereas, having a high-risk account safeguards you from chargebacks and refrains from letting you face termination.
High-risk merchant accounts facilitate you with the privilege to deal in goods that are otherwise prohibited if you have a low-risk merchant account. This ensures greater long-term opportunities for your business to grow and prosper. Ultimately, expanding your business branches would mean larger profits for you.
4. Choosing a High-Risk Merchant Account – DIY!
While looking for a high-risk credit card payment processor, comprehensive research from your end is needed. Merchants tend to be losing $2.40 against each dollar of chargeback fraud. There are many factors to be considered and you can Do It Yourself before approaching the high-risk merchant account service provider of your choice:
Prompt Support and Assistance
Things may go wrong. Things go wrong all the time but it’s how you find solutions to rectify the wrong, that matters. Make sure the high-risk credit card processing solutions are inclusive of round-the-clock support services. This will help you get your issues resolved as quickly as possible.
Static solutions have become a thing of the past. All businesses are relying on services that provide customization. As such, business objectives must be fulfilled if you as a merchant are availing services from a third party. Hence, while choosing a high-risk merchant account, you should be assured that all your specific requirements will be taken care of.
Transparency in Pricing
All the fee-related terms and conditions must be conveyed to you prior to signing a contract. You should have the utmost clarity whether a certain high-risk service provider is charging any hidden costs from you.
Advanced Technological Features
You’re right at your place if you expect your service provider to deliver high-risk payment gateway solutions. Also, you must request access to the payment platform’s APIs to acquire unhindered control over the payment cycles. Apart from that, look for features like an EMV Terminal, Virtual Terminal, PCI Compliance, Online Credit Card Processing, etc. The main aim here should be to obtain fast-paced payments devoid of any downtimes and server errors. Also, you should be prepared with your own credit card terminal in the first place. Having said that, your POS system should be hi-tech enough to equip the ground-breaking high-risk merchant account features.
Generally, all high-risk merchant accounts come with robust security protocols. Nevertheless, you should go the extra mile by choosing better security features such as anti-fraud tools. Your high-risk merchant account agent should provide an uncompromising chargeback prevention system along with a multifaceted response to your security needs.
Sign up for a high-risk merchant account with Patel Processing to protect your business!