What Makes a Business High-Risk?
Your ecommerce business has to take card payments online in respect to being successful. To grant payments online, you have to get a merchant account either via your bank or through a merchant account supplier.
When you apply for merchant processing, the banks or payment service suppliers may break down you as a high-risk merchant. What are the reasons that can generate your business to be high risk?
Knowing what these factors are can assist you to work your way around them. And cooperate with a bank or merchant account contributor who is unlocked to present you appreciative terms and conditions to reinforce your business.
Many banks and merchant account gives shelter to their interests by having a record of industries that honestly have a large risk of chargebacks & fraud. If you practice business in any of these zones, you may fall under high risk even if you give a great processing history down with your application.
You can also anticipate paying an inflated level of processing fee to cover the risk. Some of the rules and sort of industries that account providers might recognize as high-risk businesses can contain, but are not constrained to:
- Travel (unpredictable natural calamities such as weather are not up to the mark which creates the possibility of customers making cancellations)
- Adult industry (customers might refuse that they have visited the sites)
- Neutraceuticals and vitamins
- Tech support industries
- Subscription billing and recurring payments business models
- Financial services
- High ticket sales
- CBD Dealers
- Fast-growing industries that require high mass processing capacity
- Industries that are highly controlled
- Casinos and online gambling sites
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Ceased Accounts List
If your merchant processing account has been terminated for any silly reason, banks and processors can throw you on a blacklist called a Ceased/Terminated Accounts List or Match List. Since all account providers have entry to this list, being put on it makes you fall in the high risk business category. Therefore, you might find it challenging to get approved for a new merchant account. The classic reasons why the providers might select to show thumbs down to your request are:
- Committing fraud
- Laundering money practices
- So much of chargebacks
- Non-compliance with the terms of the contract.
Chances of Chargebacks
Chargebacks happen when the buyer files a dispute transaction with their card issuing bank. Chargeback requests are generally done when:
- Customers straight away deny accepting that they entered into a recurring bill contract.
- When you ship merchandise every month, and the customers deny to expect the order and give the statement that they did not place the order.
- Customers have no point in contacting you like over the phone or by email.
- You don’t react and give answers to customer queries and complaints.
- You process more credit cards than the limit granted to you by the account provider.
- The customers are not in knowledge or overlook the contract terms that fees will be levied to their credit card.
- The customer may claim that the customizable merchandise she asked for is different from the one she got.
- You request for whole payment for transactions before the customer gets the products, or you finish the service.
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Credit Card Not Present Issues
If you permit your customers to transfer the amount online without literally swiping the credit card, you can fall under the category of high-risk business. That’s in a view of fact that any transactions that take place by using robbed cards cannot be recognized without an alert that the card is lost.
To protect your firm from the possibility of fraudulent transactions, you should accept only 3D Secure Transactions. Get tools like secure code, Verify by Visa, and other same systems to safeguard you.
Always keep in mind, nevertheless, that the more steps you add on at checkout, it’s more likely you to face shopping cart abandonment you will experience.
Low Credit Score and Existing Tax Liens
Merchant account providers will go through your credit score before approving your application. If you have any dues in business or personal tax liens, you might ask to pay them off before applying for a merchant account.
Apart from the issues stated above, many other reasons can fall your business into the high-risk segment. They are as follows:
- You could be exporting your merchandise overseas to countries.
- You could get payments in currencies apart from the currency that the bank or account provider transacts in.
- Huge interval between the receipt of payments and delivery of merchandise or services.
- The time for which you have been available for business.
- Your product line may have a high cost and value or luxurious items like jewelry, watches, antiques, rare coins, or art.
- Huge than normal capacity of transactions
Even if you are categorized as a high-risk business, you can still find many ways your company is willing to provide processing for you. High-risk processors have systems in place that can help reduce the processing risk both for you and for the processor itself. As the time passes, you can make a solid processing history and have your business shift to the low-risk category. Merchant Stronghold
Merchant Stronghold is based in Clearwater, Florida. We provide the best credit card processing services for all type and size of businesses. Also, we are #1 High-Risk Merchant Service Provider in 2018, and 2019. Hence, Merchant Stronghold specializes in high-risk and offshore merchant accounts. Contact us: +1 (727) 330 – 3944.