High Risk Merchant Processing Considerations and Concerns
Is your business deemed high risk? If so, you probably know how complex and exasperating the underwriting process can be. You may have also realized how difficult it can be to find a secure and reliable high risk merchant processor. This is especially true for business owners in the collections industry where a few persons continue to act unethically and against the regulation.
The presence of these untrustworthy few has caused banks and processors to view high risk merchant processing as a liability. What’s more, third party collection businesses now have limited options when it comes to underwriting choices they can pursue.
If you are unsure of what to expect as a high risk merchant, this article provides helpful information designed to prepare you for this journey. Note, however, that all processors are different. While the general process has the same blueprint overall, certain rules and information may vary from one provider to the next.
Getting a High Risk Merchant Processing Account Approved
Once your business has been deemed high risk, there are a number of factors that determine whether your application for a merchant account can be approved. These factors will also determine how much you will pay in merchant account fees. The underwriting guidelines adhered to by each merchant account provider play a big role here as they determine whether your high risk merchant account will be approved or not.
Longevity in the business is also another important factor. While it is still possible for new businesses to be approved for high risk merchant accounts, a merchant who has a long history of successfully processing credit card payments with another processor stands a better chance of approval. Ultimately, however, the lower your fraud prevention risks and chargebacks, the easier it will be to get your account approved.
Processing Fees for High Risk Merchant’s
Often times high risk businesses attract quite a bit more than the regular merchant account. In fact, it could cost as much as 3-10 times the fee a traditional merchant account would attract. The fee largely depends on how much risk the merchant account provider will have to take in order to work with you.
As a result of the risks involved, many high risk merchant processors do all they can to tie merchants into signing long term contracts. But you do not need to be in a hurry to accept such contracts as some merchant account providers now offer month-to-month contracts. Though you may not have so much in terms of bargaining strength as a high risk merchant, you must avoid signing a contract that locks you in for the long term.
Long term contracts usually come with hefty penalties if a merchant decides to exit the contract. It would be unfortunate to lock yourself into a deal that doesn’t seem right for many years. So, if a provider tries to lure you into accepting a 3-year or longer contract, it is time to consider other options.
When presented the contract, it is … Read More..
