What do you do if you’re a high-risk business type and you’re looking for quality credit card processors? Many large merchant account providers will refuse to process transactions for high risk businesses, which limits the options that are available to hard-to-place merchants.
When you’re short on options, you may feel desperate and desperate times lead to drastic measures… accepting just any processor instead of shopping around for reputable, experienced processors that specialize in high risk merchant accounts can lead to chargebacks, fund holds, excessively high rates, or placement on the KTMF/MATCH list.
Who Is Considered High Risk
The following are just some of the businesses who are considered to be a high-risk category.
- 1-800 type chat sites
- Airplane charters
- ALL sexual oriented or pornographic merchants: (i.e. companion or escort services, adult telephone conversations, adult book stores, dating services, online adult membership or matchmaker services, adult paraphernalia or toys.)
- Amazon, Yahoo or Google Stores
- Annual contracts
- Automotive brokers
- Bankruptcy attorneys
- “Business opportunities”
- Calling cards
- Casino, gambling or gaming
- Check cashing services
- Cigarette or electronic-cigarette sales or nicotine cartridges
- Coins, collectible currency or autographed collectibles
- Collection agencies
- Coupons or rewards-points program
- Credit or debt repair
- Credit counseling
- Credit protection
- Debt collection
- Direct selling
- Discount health – medical care programs
- Weapons of any kind – guns, knives, stun guns, or ammo. Includes any parts of weapons (i.e. butts, triggers, magazines, etc.)
The Work Around
Good news! There are high risk merchant providers who will work with your business despite your classification. However, before you begin your application process, here are 5 additional tips that will help you prepare your business and ensure you’re ready.
- Minimize the number of chargebacks – chargebacks are always a bad thing, so do your best to minimize your chargeback ratio. You can easily do so by providing excellent customer service, clearly outlining your terms of service, and using a reliable shipping provider.
- Be prepared to accept stricter terms – if you’re a startup, it may be hard for you to prove your credit history. Instead of trying to find the best possible deal, consider accepting a longer payout delay or a higher rolling reserve. Once the initial time period is over, you can ask the bank to waive those terms after reviewing your account and seeing that there is no chargebacks or potential fraud issues.
- Make sure your documentation is complete – some businesses forget to hand in all the documents or aren’t aware of all the documentation is needed. Ensure your application contains all pertinent documents that can help you portray your business in the best possible image. You’ll want to include your financial reports, business plan, tax documents, and anything else that proves your business is reputable.
- Pay all your bills on time – as a business owner, it’s inevitable that you will have some expenses of your own. Rent for your store space, hosting a domain, utilities, etc. are just some of them. Ensure all the bills are paid on time to avoid not only late fees but also being marked as a non-payer yourself. This helps with your own credit score which gets checked when you apply for a high-risk merchant account.
- Make sure you choose the right high-risk merchant account provider – finally, the last tip is to ensure you choose the right provider for your business. Merchant account providers that specialize in high-risk merchant accounts have a better understanding of the risks involved and will be able to come up with the right solution for your business.
There are essentially five things to do when looking for a merchant account provider if you are a risky business:
- Do keep your standards high! Don’t settle just because you receive rejection. Stay the course and connect with merchants who specialize in high risk merchant accounts.
- Research! Find out if your business is considered high risk
- Understand what rates to expect because of your situation
- Don’t skimp on reviewing the details of your contract. For every ethical and reliable high risk processor, there are about 325 unethical ones that are just waiting to take advantage of you.
- Read the fine print! Make sure you know your contract and don’t be afraid to consult an attorney.
Getting a merchant account as a high-risk business is not so difficult when you’re prepared and know what to look for. Use the tips above to your advantage to prevent any possible chargeback or fraud issues, to show that you’re willing to work with the bank to establish your reputation, and find the best solution for your business.