High-Risk Merchants & Payment Processing
While it’s easier than ever to build a website and reach consumers around the world, setting your business up to accept online payments is a bit more complicated. Even if your business doesn’t have a significant online presence and simply needs to allow local customers to use a variety of payment methods, setting up the right payment processing software to facilitate transactions is essential for sustainable success.
How Does Payment Processing Software Work?
It would be easy to simply describe payment processing as the “middle man” that connects your business to the financial institutions that manage credit cards and bank accounts, but it’s helpful to understand how that process actually works in practice. This will help you to select the payment processor that’s right for your business. All payment processing software consists of three key elements:- Your Merchant Account: All customer payments are deposited into your business’s merchant account. While it may not be the primary account where you manage your day-to-day expenses, any transactions carried out through your payment processing platform go through here.
- Your Payment Processor: The payment processing company manages the back end of the processing software and helps to connect your business to credit card and banking networks to facilitate transactions. They are typically responsible for ensuring the security of transactions and dealing with fraudulent activity or chargebacks.
- Your Payment Gateway: As the name suggests, the payment gateway connects your physical and online point of sale (POS) systems and your merchant account to credit card networks and issuing banks. Without a payment gateway, there would be no way to transfer data between accounts.
- The POS submits the transaction details to the merchant payment gateway, which then shares that information securely with the processor.
- The processor delivers the information to the customer’s bank or credit card network (depending upon the payment type).
- The issuing bank reviews the transaction and then approves or denies it.
- If the transaction is approved, funds are released and transferred to the merchant account.
- The approval/denial notification is sent back to the processor, which is then relayed to the POS through the merchant gateway.
Why Your Business Needs the Right Payment Software to Grow
If your business is planning on accepting credit card, debit card, or ACH payments in any capacity, you’re going to need some form of payment processing services. It’s important to take a long-term view of how you expect your business to grow when selecting the right payment processor, however. Not every merchant payment processor provides an “all-in-one” solution. Some only connect existing merchant accounts to their merchant gateway while others provide both merchant account services and the software integrations needed to set up a POS for online payment processing. This can be especially important when it comes to businesses that operate in what banks and credit issuers designate as “high-risk” industries. Obtaining a high-risk merchant account can be quite difficult. Simply being labeled a high-risk business can lock merchants out of generous fee structures and saddle them with burdensome reserve requirements. By selecting a payment processor that specializes in high-risk industries and provides favorable high-risk merchant accounts to customers, you can set your business up for flexible and sustainable growth in the future.How to Evaluate Merchant Payment Processing Solutions
For both high-risk businesses and low-risk businesses, there are two key areas to consider when evaluating merchant payment processors.Are There Reserve Requirements?
Many payment processors require high-risk merchant accounts to meet a reserve requirement that covers the processor’s costs in the event of chargebacks or ACH reversals. There are a few different ways of implementing reserve payments, but all of them withhold a portion of payments made to merchants. In many cases, reserve requirements can cut into a company’s revenue significantly. While many processors treat reserves as a standard industry practice, discerning businesses can find providers who do not require their customers to carry an account reserve, even for high-risk merchant accounts.What is the Fee Structure?
Payment processing will always carry some amount of fees. That’s because the technical infrastructure needed to facilitate transactions securely must be maintained, and everyone involved in payment processing covers these costs by charging fees. What sets a quality payment processor apart, however, is transparency. There should never be any hidden or unexplained fees involved with payment processing. Although there are a few different ways that fees can be accessed, merchants should always know exactly what they’re being charged, when those charges are levied, and why they are necessary. Confusion or lack of clarity surrounding fee structure is an invitation to abuse, and could leave merchants unable to protect their business from being exploited by predatory processors.Experience the Next Generation of Payment Processing Software
Transcend Pay’s revolutionary payment processing software is an all-in-one payment processing solution that makes facilitating transactions easier than ever. Thanks to our extensive financial network, we approve 99% of high-risk merchant accounts. With no reserve requirements and no hidden fees, our online payment processing allows merchants to keep more of their hard-earned revenue so they can grow their business. Whether you’re using our dedicated payment processing software, connecting to our merchant gateway through our robust API, or installing our innovative Tpay solution to start accepting online payments within minutes, Transcend Pay has the payment processing solutions you need to rise above your competition. Contact our team today to find out just how much you could be saving with our payment processing services.