High-risk merchant account can protect your business during high volume transactions

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A high-Risk Merchant Account can protect your business during high volume transactions

A high-risk merchant account is a mandate for an online business to accept online payments from customers or other businesses globally. The process to apply for a high-risk merchant account is specified and restricted. Yet, some merchants or industries are regarded as high-risk. And may face further issues when getting a merchant account. Keep reading to know more about what are high-risk merchant accounts and what to evaluate when going to get one.

What Is a High-Risk Merchant Account?

A high-risk merchant account is a payment processing account preferred for a high-risk business. Whereas, a business is regarded as high-risk if there is a sensed risk of financial loss.

To perform underwriting for a merchant account. Usually, a bank must authorize the merchant for business banking and merchant services. A merchant is even required to know about the risk level of business assessed by the bank or credit card networks.
High-risk merchants may have trouble searching for payment processors, face stringent restrictions on their online business, and have higher fees for receiving payments online.

However, a merchant must be familiar with their risk level to understand which documents they require and which procedures they must obey. But businesses are usually not familiar with these risk levels presence.

Risk factors for an online business

Yet, these given factors drive an online business in the high-risk category:

  • Poor credit score
  • Dealing products or services labeled as high risk by VISA and MasterCard
  • An industry or business structure that has a record of fraud or chargeback issues
  • The average transaction of more than $500
  • Taking payments in various currencies
  • Businesses situated or functioning in high-risk countries and regions
  • Not being documented with local regulatory authorities
  • Presenting free trials
  • Delivering subscriptions or accepting recurring payments
  • Irregular payment processing

Even if a business is completely clean, banks consider the industry as an entire and assess other businesses in the industry as a measure. So, for instance, even though a travel agency has no record of fraudulent payments, competitors in a similar industry might. That’s why the travel industry regards high risk.

Which Industries Are Regarded as High Risk?

Basically, we suggest that merchants always confirm their payment processor and payment gateway provider. And bank ahead of time to ensure they receive payments for these kinds of high-risk businesses.

Below are examples of practically high-risk industries:

  • Financial Services
  • Accounting Services
  • Alcohol
  • Cryptocurrency
  • Legal Services
  • Debt services
  • Newspapers and Print Publications
  • Pawnshops
  • Transportation and Trucking
  • Telemarketing
  • Direct Marketing - Inbound Telemarketing
  • Online Gambling
  • Adult Entertainment
  • Cannabis
  • Insurance
  • Real Estate
  • Travel Agencies
  • Telecommunications (VOIP or Calling Cards)

What is the procedure for High-Risk Payment Processing?

A high-risk payment processing procedure contains the following players:

  • Customer
  • Merchant
  • Payment gateway
  • Issuing Bank
  • Payment service provider
  • Payment card company
  • Issuer’s payment processor

High-risk payment processing doesn’t vary from low-risk payment processing. Yet, high-risk businesses must follow further rules & regulations:

  • Preferring two-factor authentication may also need to boost the identity-verification process. Some payment processors also select three and multi-factor authentication, as well.
  • Payment service providers even limit the number of transactions that can be completed to a high-risk merchant account monthly.
  • However, the payment processor can refuse every transaction that transcends the consented amount of funds that a merchant is authorized to accept from customers on monthly basis.
  • Around 15% of every transfer created to a high-risk merchant account may be operated as a rolling reserve. It can also be utilized in matters of chargebacks, limited processing choices, payment gateways, and high processing ratios.

High-Risk Merchant Account Advantages

High-risk merchant accounts face-selective restrictions, but they come with advantages like:

  • Recurring payments. Recurring payments are also obtainable to all high-risk merchant accounts.
  • International billing. High-risk merchant accounts do not restrict to managing payments in a specific area. But merchants can gather payments globally.
  • The more comprehensive type of services and products. Because a high-risk account requires going through a stringent screening process. So, the business is authorized to offer a broad range of payment services.
  • Adjustable payment methods. High-risk businesses have access to a huge assortment of international and local payment modes. However, this assures that customers always have choices of their desired payment methods.

How Do I Acquire the best High-Risk Merchant Account?

When a merchant specifies that they permit a high-risk business bank account, they obey the steps below to get one:

  1. Find a dedicated payment processor or merchant services provider that delivers high-risk accounts that satisfy the business’s outstanding necessities.
  2. Forward an application to get a merchant account. Yet most payment processors take online applications.
  3. Experience a thorough study of business functions and economic statements executed by the payment processor’s risk executives. They even examine the credit history and the processing history of every merchant, comprising chargebacks, the total processing ratio, and the total number of transactions. Merchants also requires to present the details of all the shareholders.
  4. Wait until risk managers determine whether the business authorizes for a high-risk merchant account.

Every payment processor trading with high-risk merchant accounts assesses every business separately. Although they review everything, from possible payment fraud and scams to the chargeback volume.

Only when payment processors understand everything about the business are they able to deliver or refuse payment processing services to high-risk vendors.

The fact of High-Risk Merchant Account Instant Approval

Whereas traditional low-risk businesses will get consent in a day or two. A high-risk merchant account will need a minimum of three to five business days for clearance. The process can take as long as three to five weeks. Authorizing a high-risk business requires more extensive research into the credit history of both the business and the merchant, also the industry type.

Conclusion

Executing a high-risk business can be problematic, but it can provide great prizes. When you comprehend what a high-risk merchant account is, you can fetch your documents ready and begin receiving payments for your products or services.
With a suitable payment processor from WebPays, you’ll evade many possible issues and assure the flawless growth of your online business.