What is High-Risk Credit Card Processing?

What is High-Risk Credit Card Processing?

Despite the reality that the items and services sold by “high-risk” merchants are often legitimate business transactions, banks, and credit card companies are leery of the associated reputation. Many merchant solution banks are wary of collaborating with high-risk credit card processors. because they are held accountable when a transaction is challenged. Because the items and services in high-risk credit card processing are frequently heavily regulated, they raise regulatory concerns.

The only way to get around this hurdle is to find a high-risk credit card processing partner with experience in this high-risk credit card processing. And established ties with financial institutions willing to take on the majority of the risk associated with these transactions. Consider using a high-risk credit card processing business as a middleman between the merchant solutions and the bank to establish a more dependable relationship.

For a variety of reasons, high-risk processing merchants may be added to the high-risk list. 

One of the most common reasons is that merchant solutions provide products or merchant services. They have a history of high chargeback rates. because consumers are more likely to dispute recurring payments. Whether for legitimate or fraudulent reasons, merchants’ solutions that accept them are more likely to fall into this category. It’s also conceivable that they’re novice traders.

High-risk Credit Card Processing Works

High-risk credit card processing refers to credit card processing for businesses that are classified as high-risk. High-risk processing merchants can be found in a range of merchant solution businesses, but they consistently have a few traits.

High-risk processing will typically consider companies with a high chargeback percentage and a difficult time processing refunds to be high-risk. Instead of using a traditional bank, many merchant solutions must use high-risk credit card processing. Exorbitant fees and rolling reserves, for example, are included. High-risk processing reviews a company’s payment processing history to determine whether or not doing business with them is risky.

Merchants Do About Credit Card Processing with High Risk

The first thing high-risk credit card processing merchants should understand is how to examine a merchant solution account application. Like any other financial connection, the underwriter wants to avoid a large number of high-risk processing of unpaid chargebacks and avoid government or card brand regulatory fines.

Some approaches can help merchants solutions avoid risks. It is a good idea to have some money in your bank account when dealing with high-risk credit card processing to show consistency. You’ll need to show that you’re a legitimate merchant solution and be upfront about the products or services you’re providing. Aside from those crucial financial checks, you’ll want to verify that your website adheres to vital security precautions. such as secure licensing (SSL), and that your merchant solutions concept is adequately promoted. It means being upfront and honest with customers about the terms and circumstances of buying products or the merchant’s e-solution, as well as your shipping and return policies.

The final piece of information that Merchant e solution must consider is the amount of processing volume approved. With high-risk credit card processing, this procedure becomes a little more complicated. For example, just because your merchant solution business can earn a significant amount of monthly revenue does not mean the underwriter will approve it or take on the risk. The goal is to provide as much information as possible to the writer so that he or she feels confident taking on your merchant solution.

Unfortunately, many insurers will only be persuaded if you can demonstrate consistency over time. Merchant e solution has a 3 to 6-month period of effective high-risk credit card processing without a significant number of chargebacks. A writer will usually increase your approved processing volume. Consistent transaction sizes can also help your company create consistency. which may cause an underwriter to reconsider your monthly processing volume restriction.

Reasons a Merchant May Be Considered High-Risk

  • There are many reasons why a payment processing platform may view you as a high-risk merchant, and each provider has different criteria for assessing risk. Generally speaking, here are some of the top reasons why a merchant may be categorized as high-risk.
  • High transaction volume. If a merchant processes more than $20,000 in monthly payments or has an average transaction of $500 or more, they may be classified as high-risk. 
  • They are accepting international payments. If a merchant sells to customers outside of the U.S., Canada, Japan, Australia, or countries in Europe, they may be considered at higher risk of fraud. 
  • New merchant. If a merchant has never processed payments or has a minimal history of processing transactions, they may be considered high-risk.

How to Choose a Reliable High-Risk Payment Processing Company

If you’ve been designated a high-risk credit card processing merchant or suspect you are, use these tips to find a merchant solutions account that will accept your business and meet your needs:

· Review the accepted business solutions kinds on the processor’s list: 

The designation of a processor as a high-risk credit card processing specialist does not indicate. That it works with all types of high-risk businesses. For example, some high-risk credit card processing providers will accept cannabis merchants while others do not.

·  Look for a high-risk credit card processor that can distribute loads evenly: 

Load balancing allows you to split your transactions among multiple merchant e-solutions accounts. They are all part of the same payment gateway. There are several benefits to this. For starters, you’ll be able to rely on the others if one of the accounts fails. Having numerous merchant e-solutions also allows you to process more transactions per month, minimizing your chargeback risk.

· Read your contract over and over again:

Because most high-risk merchant solutions account providers work with a variety of high-risk credit card processing accounts, rates, and fees vary depending on which merchant solutions account (or accounts) you choose. As a result, pay great attention to the rates you’ll be charged and any additional costs. Even if you’re not likely to be accepted, it’s not a bad idea to request interchange-plus pricing or a month-to-month contract.

· You’ll have to process payments as a high-risk merchant solution.

If you are deemed a high-risk merchant solution, high-risk credit card processing will be more expensive for you, as unfair as it may appear. However, this does not mean you should exploit. Even though very high-risk credit card processing may refuse to work with you, there are reputable companies that will.