In the world of online marketing merchant services accounts allow for fast and efficient economic transactions, but their services are not the same across all industries. High risk businesses have a hard time being qualified for the same business accounts as most other businesses. If you are wondering about how this could apply to your business, read on.
There are many reasons that a business could be considered high-risk. The first has to do with credit scores, if the owner has a very low credit score or is beginning a startup with no credit history, the business could be considered high-risk.
Competition is another factor and businesses opening in saturated markets could also be considered high risk. Long distances can add risk factors and those businesses addressing customers very far from their location are risky due to the discrepancies that can appear on credit card statements.
It is important to note that in situations like this, it is essential that you let your clients know what will appear on their credit card statements, if they were to find a detail on their statement which is confusing or, worse yet, in a different language it is quite common to immediately cancel the charge.
Those businesses that operate with considerably larger amounts of cash than standard retail figures or lower than $999.99. If your average sales collect over $1000 to $10,000 your business will be considered high risk by the merchant community. IF transactions are segmented and addressed over long periods of time, the chance that payments will discontinue is higher and this places a risk factor on the business as well.
The final type of business that could be considered high risk are those travel and accommodations businesses that will book events and arrangements many months or even a year ahead of time. Plans are always subject to change, and the risks are high here too. The same applies to those that provide tailor-made product or bespoke items made to order for the same reasons.
What Can I Do If My Business is Labeled High Risk?
If you have a business that has been classified as “high risk”, you needn’t fear as there are custom risk solutions available. It is still possible to process credit cards and complete enough transactions to be competitive in your industry. You will notice that the financial service you rely on require more information than usual to calm their financially-prudent minds, but essentially their services will remain unchanged. Typically, banks will require some kind of payment to compensate the risk, this may be a reserve for processing or even a higher fee for each transaction.
It will be important to weather this initial stage until your business has completed enough successful transactions to be considered low risk. If the owner of the business does have positive credit rating, this may be considered when making adjustment from high to low risk business. The process of becoming a low risk business from a high-risk business may be a matter of months or even years, much depends on the operating plans of the businesses in question.
High Risk Processing Options
Additionally, there are various legitimate organizations that offer special solutions to the high-risk business. If the business has a positive history of processing, there is a good chance your business can receive one of these accounts. This has also been called “Third-Party” processing and has been an advantageous option for a variety of businesses.
Avoiding Predatory High-Risk Merchant Services Providers
As you may imagine, where there is a need there are opportunists looking to make a dishonest buck or two, don’t let them pull a fast one on you. There are many operations claiming to be legitimate service providers offering incredible deals to the high-risk business community. Because the high-risk community is in dire need of better options, they make easy prey to snake-oil vendors.
Furthermore, it is not always easy to tell the legitimate services from the dishonest ones, but here are some helpful points that can help you stay safe from these traps.
- Check the Webpage – a reputable organization will have fully-functioning top-of-the-line online service center. Those that are looking to snag your cash will have cheap and tacky setup, the best their ill-gotten gains could afford them.
- Check the Data – never sign on unless you have done your due diligence. This means checking around all your contacts and info sources for the word on the street. Reviews can tell you exactly what you can expect from your high-risk service before you find out the hard way.
- Read the Contract – as a serious business person, you can’t sign a document pertaining to your financial future without understanding it from every angle, and if you feel unequal to the task, get professional legal help. Your business future demands it; it is within these documents that the seeds of your undoing are cultivated
A Few Final Word from the High-Risk Community
While it is tough to find a completely satisfactory merchant service, those with a high-risk business have an even harder plight. You need to square yourself with the fact that higher rates and detailed information is just a part of the practice. Nevertheless, you should never settle for poor quality service or issues with your support and your merchant service should make the whole thing much easier on your situation and not harder. As mentioned in the article, there are plenty of reputable merchant service out there with solutions to your high-risk needs.
One final point need to be made clear. It will be a tough road if your business is high-risk, but never attempt anything shady or dishonest when applying for your account. Shun the temptation and perish the thought! When your deeds are discovered (and they will be before you can make any significant profits) your account will be shut down quite suddenly. Merchants who have attempted this have found themselves blacklisted by majority of the merchant account community.
Be sure to check out the reviews of top Merchant Account Providers for High-Risk Businesses like yours, for more information.