Bankcard Brokers specializes in providing merchant services to high risk businesses.
You may ask, is my business high risk? High risk businesses are differentiated from traditional retail accounts, particularly when it comes to merchant accounts. With a merchant account, a business can accept payments by debit and credit cards. However, credit card processors may reject merchant account applications from businesses that are considered risky. Without the ability to accept credit cards, in today’s world, business is impossible. Bankcard Brokers specializes in high risk merchant services, empowering entrepreneurs and legitimate businesses around the world. Even if your business is categorized as high risk, we can set up merchant account services through our worldwide network of institutions, at the best available rates. Not sure if your business would be considered high risk?
Here are five major signs that suggest your firm is high risk.
1. Risky Industry
Certain business types are almost always considered high risk, due to the nature of their business. For instance, products with moral ambiguity, high likelihood of fraud, federally monitored substances, and foreign incorporation are classic reasons for categorizing entire industries as high risk. Under this umbrella fall adult services, online casinos, e-cigarettes, and online pharmacies, along with aggregate industries that do not sell their own products.
2. History of Chargebacks
A history of chargebacks will send your firm into the high risk category. A chargeback occurs when a customer reverses a credit card or debit charge. Some industries are more prone to chargebacks, by the nature of what they do. Other businesses fail to track and correct issues that cause chargebacks; over time, this can harm their reputations with merchant account service providers.
3. Poor Credit Rating
Payment processors consider merchant accounts a form of credit. This makes sense if we understand the payment processing procedure. When a credit or debit card is swiped for payment, the card issuer (Visa, MasterCard, etc.) approves the payment, and the merchant account services provider processes it. Here’s the hitch: the processor is liable for the payment in case of a chargeback or fraud. Typically, these costs are passed on to the merchant. However, if the merchant goes out of business, the processor is still responsible for payment. Therefore, the processor “floats” the credit during the processing phase. A poor credit history is therefore a red flag for payment processors.
4. Remote and Advance Payments
It might surprise you to learn that e-commerce sites tend to be categorized as high risk merchants. In-person transactions have lower chargeback rates. Restaurants, for instance, are considered low risk; for every million dollars that restaurants process, just $100 will be charged back. However, travel payments tend to be done remotely, and often in advance. Accordingly, the travel chargeback rate tends to be about ten times higher than that of the restaurant industry. Advance payments are risky because the payment processor is still responsible for chargebacks if the business is insolvent before prepaid contracts end or if a consumer does not agree with the cancellation policy and initiates a chargeback to fight it.
5. Invalidated or Negative Financial History
Underwriters consider business longevity, financial profile, and profitability when evaluating merchant account applications. New, not-yet-established businesses have nothing to prove their solvency, so they may not be approved for card processing. Limited assets can also be problematic; if you’re asking to process a million dollars of transactions, but you only have $10,000 in the bank, it’s likely you’ll be labeled high risk.
If your firm has been categorized as high risk, it’s key to find a merchant services provider that can establish your payment processing quickly, correctly, and transparently. Here at Bankcard Brokers we specialize in achieving approval for high risk merchant account applications from legal industries. Our unparalleled international network of financial institutions allows us to offer the best payment processing tools and rates for high risk businesses.