Regardless of whether a business is considered low or high risk, setting up merchant payment processing services is an important step for all small business owners.
For standard or low-risk businesses, the process is relatively cut and dry. There are certainly no shortages of merchant payment processors willing to offer their services to new businesses.
The greatest challenge for these low risk business owners is to determine which offer is actually the best deal. Comparing rates and fees from various providers is rarely comparing apples to apples.
However, rates between low risk credit card processing providers will likely be relatively competitive. Therefore, the selection of one provider over another will not result extreme cost variation over time.
High Risk Payment Processing
Businesses selling products and services in high-risk categories have a greater challenge. Far fewer merchant payment processors are willing to provide merchant services to high risk industry businesses.
Of course there’s a reason for this and it’s pretty obvious. Risk. High risk businesses traditionally carry more risk for merchant payment processors for several reasons, including these two big ones:
- A business has no way of determining the true identity of the purchaser. Is he or she the actual cardholder or someone making a purchase using stolen credit card data? This is typically the case with card-not-present transactions (all online sales).
- An industry that has a historically higher rate of chargebacks by customers. Disputes and chargebacks occur when customers did not receive goods, received damage goods or are not completely satisfied with a purchase.
Is your business in a high risk industry? High risk industries can include:
- Adult products & services
- Auctions (including penny auctions)
- Brokering services
- Calling cards
- Casino & gambling
- Charter services
- Check cashing services
- Credit repair
- Debt collection
- E-books & software
- E-cigarette & vapes retailers
- Event ticket brokers
- Federal Firearms License (FFL) dealers
- International merchants
- Magazine & subscription services
- Medical Marijuana
- Multi-level marketing (MLM)
- Pawn shops
- Tech support
- Time shares
- Travel agencies & clubs
- Vitamins & dietary supplements
When attempting to find and pick a high-risk merchant account services provider, it may seem that there are few options. Some business owners waste a lot of time contacting providers that do not work with their business type.
In some cases, providers accept applications from high risk businesses and submit them to underwriting. After waiting 2 weeks or longer, the business owner is told that the account was not approved, requiring the business owner to start the search process all over again.
Business owners that are lucky enough to find a provider right away are often shocked by the rates. Providers that are willing to work with a particular business may quote rates ranging from 5-15%.
The truth is, merchant account rates in the 5-8% range are rather reasonable for high risk payment processing services. After all, the provider does incur a certain risk for working with these types of businesses. This higher cost offsets the provider’s risk.
Offshore Payment Processing
Sometimes businesses in the U.S. turn to offshore payment processors when they’re having a difficult time being approved for domestic provider. Offshore merchant services providers can be more lenient in the approval process, but merchants should be careful about using these providers.
Rates for offshore providers can be as high or higher than the rates of domestic high risk payment processors. And what’s really scary is that the merchant really has no control of the funds. Not only do offshore processors tend to have required reserves and longer settlement periods, but also if there’s ever a problem with the processing bank, there’s no guarantee that a business will ever receive funds from sales.
Unless left with no other options, businesses in the U.S. should exercise caution with a pick of high risk merchant account services providers that are offshore.
The Transaction Group is Here for You
Have you been told by or already aware that your business falls into a high-risk classification? The Transaction Group can help.
Since 2004, we’ve been assisting businesses throughout the world with credit card processing services. And when it comes to high-risk, we’re the experts.
Over the years, we have built solid relationships with banks and high risk merchant payment processors. Together with our partners, we have the ability help virtually all legally operating business to get approved and set up with merchant accounts.
Get Started Today
Time is money. Without the ability to accept credit cards, you’re simply losing money. If you’ve already wasted enough time searching for a high risk merchant services provider, give us a call today.
At The Transaction Group, we’ll determine which of our solutions is the best match for your specific business. Then we’ll work to get you approved with one of our preferred high risk merchant account services providers as painlessly as possible.
Approval times and rates will vary based on business type, but rest assured that we’re on your side. Allow The Transaction Group to help your business succeed.