Are you an online business? Do you have a facility to accept card payments from your consumers? Startups and small businesses are generally not very keen on accepting card payments online. It is not only because of the costs involved, but the unique set of threats it brings along. In the modern world, it is impossible to operate a business without offering an online payment option. The monthly spending on card purchases amounts to several billion dollars. Consumers look for convenience when shopping and paying. And if you are not offering them that, you’re definitely losing out on customers. In order to be able to accept credit card payments, a business needs to have a merchant account and payment gateway.
A merchant account is a type of account provided by a sponsoring bank to a retailer. It is used to process credit and debit card transactions. When a consumer makes an online card payment for a product or service, the funds are transferred to the merchant account where it is kept for a stipulated number of days. It is then transferred to a business banking account linked to the merchant account. The entrepreneur can access the funds at this stage. The time taken to settle funds could be daily or weekly; it varies according to the provider. Thus, the acquiring bank (the bank sponsoring the merchant account) offers credit to the retailer via its merchant account until the consumers have paid in full. Banks become financially responsible and this makes them very picky when it comes to approving business merchant accounts. Acquiring banks class merchant accounts as high-risk and low-risk depending on the risk inherent in payments.
Most entrepreneurs are unaware that their venture ranks among high-risk businesses until their application for a merchant account gets denied. Worse still, many find out only after their credit card processing accounts are closed and funds are frozen. The latter can amount to huge losses if credit card payments are a primary source of revenue. Businesses included in the high-risk category are: travel, adult entertainment industry, telemarketing, call centres, retail, medical and pharmacy, online gambling, debt collection, online casinos, weight loss programs, online cigarette, tobacco and alcohol businesses. They are classed as high-risk because of the following factors:
High chargeback ratio
High sales volume
Greater chances of fraudulent transactions due to card not present transactions.
High refund or reversal rate
Poor credit history
Controversial products and services
Sale of illegal products and services
Location of your business; home-based and international businesses are usually classified as high-risk.
Due to the above reasons, banks are unwilling to sponsor these high-risk businesses.
A high risk merchant account is one tailored to the needs of a high-risk business. There are several third party providers offering high-risk merchant accounts at competitive prices. They have banking relations with several financial institutions and are willing to accept liability for risks associated with these businesses. The processing fee for a high-risk credit card processor will be higher than low-risk businesses due to several added expenses. It includes the setup fees, transaction fees, refund fees, chargeback fees etc.
The benefits of opting for a high-risk credit card processor are plenty. To start with, they do not follow a one-size fits all approach. They study the business closely and outline highly personalized payment options and plans. Reliable third party service providers go beyond providing simple credit card services. They make available integrated payment gateways, point of sale systems and offer check processing, all for the convenience of consumers. High-risk merchants also find it difficult to secure funding in the form of loans. This is yet another area where credit card processors can be of help. They assist in securing cash advances needed expand your business. To add, they allow you to increase the sales volume capping as your business grows. They also enable businesses to accept international payments.
A high-risk merchant account is one that is equipped to counter fraudulent transactions. They use measures such as delayed merchant settlements. They also provide a higher level of protection against chargebacks. They cut back on losses caused by chargebacks by providing timely alerts. A few offer faster payouts and lower reserve rates.
To speed up the approval process, make sure you provide complete and accurate information in your application. Submit all the documents asked for. You should be up-to-date with the information about your business – its history, profile, volume of sales etc. Improve your credit rating before you apply; a poor credit score could be one of the major reasons you get rejected. Payment processors grant an approval only after carefully evaluating your business. Be upfront about any doubts or queries they may have about your business. So, don’t let your “high-risk” tag be a hindrance to the success of your online business. Opt for a safe, reliable and efficient high-risk merchant account and use it to the advantage of your business.Sign Up Today
Three easy steps to accepting credit cards.
Complete the online Merchant Application. Remember, there are no setup fees.Sign up
Upon approval, normally within 48 hours, you will receive an email with your account credentials.
Log into your gateway account or mobile application to process credit cards.