Businesses with a higher incidence of chargebacks and fraud — or even if you’re running a business in an industry that is prone to such things — are often seen as high risk. But it’s more than just a phrase, it’s a designation. Those that have been deemed a high risk business often have higher rates, longer delays before having access to their funds and high reserve requirements, as well as steep escrow fees and other challenges. So, if your business has been designated a high risk business, you’ve got quite the uphill battle to climb.
Not only do you need a high risk merchant account so that you can run your business efficiently and effectively, but you also need to find a provider that will help you with things like instant bank verification, instant credit card processing and general ACH processing on the ACH network. But if you’ve never taken a look at your payment processing, you may be unaware of the many benefits of a high risk merchant account, as well as the value of a trusted partner that can help it all happen.
What Is a High Risk Merchant Account?
As the name suggests, a high risk merchant account is a merchant account for high risk businesses. If you run a business or exist in an industry that is prone to chargebacks, fraud and other challenges, you’ll likely be identified as a high risk business, regardless of whether your business suffers from the same problems. That said, even a typical business can be deemed high risk if their transaction history suggests as much, which typically carries operating penalties such as higher transaction fees, rolling reserves and other hoops to jump through.
Difference Between Low and High Risk Merchant Accounts
While you won’t necessarily be able to pick between a low and high risk merchant account, there are very real differences between the two designations. Most merchant account providers will assign a designation when you sign up based on their internal criteria, and you’ll either have to live with it or go with another provider if you want to revisit your rate or fees.
If you qualify as a low risk merchant, you’ll avoid the steep fees and other roadblocks that are common with high risk merchant accounts. But it also means that you’ll likely have to process less than $20,000 monthly with average transactions under the $500 price point. The industry you operate in will also need to be seen as low risk, and you’ll have to carry a zero to low chargeback ratio with low to no returns.
On the other hand, high risk merchants typically have a chargeback ratio over one percent, as well as large monthly sales volumes over $20,000. Transactions are also often greater than $500, and their transaction history may be littered with excessive chargebacks, fraud and other problems.
Make That High Risk Designation Work for You
If you’ve been designated as a high risk merchant, there’s likely not much you can do other than finding the right partner. Providers won’t let you get away with a regular merchant account because of your transaction history or the vertical you work in, and the partner can make all the difference.
However, not all high risk merchant accounts are created equal. Some merchants will stick you with fees and other hoops to jump through at every turn, while others will work with you and try to minimize the disruption to your business and the challenges that come with operating under a high risk merchant account.
Reduce Those Fees and Processing Delays
By far the number one benefit of a high risk merchant account is to reduce the fees and processing delays associated with a typical high risk merchant designation. Instead of being required to keep huge balances in escrow and taking days to process any of your payments, a high risk merchant account with the right partner can allow you to operate without your merchant account holding you back.
Aside from reduced fees and rates, you’ll also have easier access to the funds that are rightfully yours with lower processing times and less roadblocks overall. Rather than tying all that money up in delays and steep balance minimums, why not opt for a provider that will work with you, helping you process your payments while you work hard at growing your business?
More Flexible Payment Options
Another benefit of a high risk merchant account is that you’ll have more flexible payment options over traditional merchant accounts. So-called low risk merchants are only able to process certain credit card payments and not others while high risk merchants can process recurring payments, as well as a greater variety of services and goods. Overall, a high risk merchant can also process more payments and have a higher monthly volume of payments without triggering any red flags.
In addition to more options when it comes to the goods and services that you offer, a high risk merchant account is simply more flexible than a standard merchant account, allowing you to run your business as you see fit instead of trying to fit your business to the standard of your merchant account.
Accept International Payments Without Issue
Most companies may only process local payments for their goods and services. But with the explosion of online goods and services, it’s true that more and more companies are shifting their focus internationally, or at least selling goods and services to an international audience as well as a local one. That’s great for international consumers, but not for the businesses that are stuck with traditional merchant accounts.
By comparison, a high risk merchant account makes international payments a cinch, with fewer restrictions and higher limits that won’t limit any kind of global expansion that you have in mind. Or, if you’re merely offering services online internationally, you’ll know that your merchant account won’t let you down.
Choose Your High Risk Merchant Account Wisely
As we mentioned earlier, not all high risk merchant accounts are the same. Some will try to stick you with steep fees, processing delays and other challenges while you’re busy running your business. But the good news is that with the right financial partner, you can turn that high risk designation into an asset, reducing your fees as well as the time that it takes to get your money. Here at TranscendPay, we’ve created a platform for high risk businesses that helps make account payment processing easy. Contact us today to see how we can help.