Website hosting companies are considered by processing banks to be high risk businesses, and therefore credit card processing for hosting services requires a high risk merchant account.
Since 2004, The Transaction Group (TTG) has been providing high risk merchant account services for all types of businesses, especially hosting services. Credit card processing for ISP and internet providers is one of our specialties.
We are committed to providing our merchants with the best solution for their needs. If you operate a website hosting company and need a merchant account, TTG can help.
The classification of high risk for hosting companies:
Similar to a lot of service type businesses, website hosting companies or ISP’s usually operate using a deferred revenue model. In this type of system, the business collects payment before or at the start of service.
The main reason that the deferred revenue model is considered to be high risk by merchant account service providers is the higher rate of charge backs by customers.
If the number of charge backs exceeds what Visa and MasterCard allow, the processor will incur penalties. For this reason processors that provide merchant accounts for higher risk businesses spread this risk to all merchants in this category by issuing higher rates.
Other variables that determine whether or not a business is high risk:
• credit score of the principal in a small company
• average ticket (high ticket transactions carry higher risk)
• operating procedures
• processing history
Established businesses can receive better rates. A good transaction processing history with a low charge back ratio will allow for negotiating and securing better rates from a merchant account provider, regardless of it being considered a high risk business.
For processing history verification, most processors will require three months or more of bank processing statements before they will quote a rate to a high risk business.
Setting up credit card processing for hosting services that are in the start up stage, or that have a less than perfect processing history can be challenging. Although most businesses in these situations can still be approved, usually they are approved at higher rates. Building a good processing history over time will allow a business to negotiate better rates in the future.
Due to the risk for fraudulent activity, the majority of high risk merchant accounts include specific provisions such as:
• longer funding waiting times
• security reserves
• limits on monthly volume and high ticket transactions
• higher rates and charges
Sometimes merchant account providers have programs to further educate merchants on processing. These programs teach merchants how to spot potential fraudulent activity as well as how to reduce charge backs by customers. If available, merchants are encouraged to take advantage of these programs. In time, merchants in the high risk category will be deemed less risky by the processor and may have the ability to negotiate lower rates.
Get Approved Now:
At TTG our customers are important to us. We’ll take the time to answer all your questions and let you know what you can expect. We have helped hundreds of high risk businesses establish high risk merchant accounts.
If your web hosting business requires credit card processing for hosting services, we can help. We have banking partners worldwide who are able to set up credit card processing for ISP and internet providers with the most competitive rates.