Understanding what factors make your business high risk will help you succeed in running your company and enjoy the benefits provided by high risk merchant accounts. This article will help you know the criteria determining the high risk nature of your business.
What Makes Your Business High Risk: High Risk Merchant Accounts
There is more than one factor categorizing your business as high risk. However, different individual service providers set different criteria when determining whether you’re a high risk business or not. Two of the most critical factors have to do with industry types and a high risk of financial failure.
Payment service providers (PSPs), as well as acquirers, card schemes, and other institutions, analyze the possibility of financial and reputational damage that your company can deal with. Here are the main factors making your business high risk:
- Industry Type: there are certain industries such as weapon sales, adult services, CBD products, online gambling, tabbed as high risk
- Higher Rate of Chargebacks and Fraud: a chargeback is a payment dispute that you can deal with when a credit cardholder files a dispute concerning the validity of a transaction and requests that it be reversed. High risk businesses pose higher rates of fraud and chargebacks for credit card processors. Expect to be charged more for merchant services if you’re classified as high risk?
- Overseas Operation: businesses headquartered overseas and selling to U.S. customers deal with complications stemming from banking regulations and national laws. This increases the chances of fraud.
- Poor Credit History: payment processors look at applicants’ credit histories when determining potential risks. So, if you’re in a traditionally low-risk industry, you may be put under the high risk category if the processor has concerns about your personal credit.
- Startup and Newer Business: if you’re a starter or new in business, the financial institutions will consider you riskier as compared to already established companies having operated for many years.
- Low Volume, High Cost Purchases: if you’re are involved with low-volume, high-cost purchases, you may fall under the high risk category.
You may be classified as high risk because of certain factors associated with your business. These include a higher rate of fraud and chargebacks, and not only. As a high risk merchant, you need to work with a reputable processor in the high risk field to get the best processing solutions, including
high risk merchant accounts that best suit your business.
Reasons Why Your Business Is High Risk
Financial institutions classify businesses as high risk based on more than one factor. Mostly, the top conditions include the high risk industry and risk of financial failure. Work with a true high risk payment expert to get the most advanced, reliable, and cheapest merchant processing solutions for your company.
Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated high risk merchant accounts processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.