If your business is in the list of High-risk categories, finding a payment processing company, loan, as well as insurance, is very difficult. The main features that offer the characteristic of risk are chargebacks and the possibilities of fraud. Usually, the underwriters of the payment processing bank determine whether a business is to be categorized as risky. The designation of risky for your business needs not a death blow to the business. Many banks provide payment processing services risky businesses, but at a higher cost.
Let us discuss what all you need to know about a High risk merchant account?
How to know whether my business falls under the risk category?
Before categorizing a business as risky, the underwriters will take into account your business credibility. Whether you earlier had a high-risk merchant account that has been blacklisted, have a financially sound business. They will also check whether your business had a lot of chargebacks. They will also study your business history to know how many years you had been in service, type of business you are carrying on. Finally, they will check whether your business name is in the prohibited category in the MATCH list.
What are the high-risk merchant services?
- Pharmaceuticals:
Some medicines will lead you to irreversible damage due to an overdose. The business that sells medicines with marijuana as one of the ingredients, it is more likely to be categorized as a high-risk business. The fact that many states in the US have approved the medicinal property of marijuana, still it is a matter of concern. Now many banks have started providing high merchant business accounts to pharmaceutical companies.
- International business:
Those businesses which are headquartered outside the place of business are facing a higher threat. The international presence of your business increases the chances of fraud and hence will be charged more than the normal processing rate.
- Gaming business:
The gaming business is the cradle of fraud and for the same reason many payment processing companies charge a bit more. Moreover, the US Supreme court has made betting on games and sports legal.
- Online Vape merchant account: If you are running an online Vape business, it is a boon to those who struggle to stop smoking, but trouble for you. E-cigarettes or Vape are high-risk businesses, and many banks don’t extend payment processing services. If you want to open an online Vape Merchant account, register your product with the FDA. In addition to that, you have to register your website with a Master card and Visa card and pay a high fee of $1000 year on year. You have to register your e-product with FDA as well.
Conclusion:
There is a high chance that the banks will reject your application if your business comes under the high-risk category. The underwriter of the banks will take into account the very nature of the business, your payment history, and the years of standing in business before branding yours as a high-risk business. For this reason, they charge 15% as processing fees. You can also keep a rolling reserve as per bank terms and conditions to save the bank from fraud and chargebacks.
