The term “High-Risk” is enough to scare many merchants. The truth is high-risk businesses although may be vulnerable to high risks of credit fraud and chargebacks, also yield huge profits. Dealing in high-risk business also means your business falls into the high-risk credit card processing category. Again, this shouldn’t be seen as a negative aspect of a high-risk business. It can be extremely beneficial for your business.
To conduct online business, every business requires credit card processing options. This can be done only by opening a merchant account with an acquiring bank. Numerous companies are providing such services and their charges vary a lot. To put it simply, the cost depends on the following factors – the bank you choose, the type of business you have, and the volume of your business transactions. In short, it depends on the risk that is associated with your business.
One may ask what factors are used to decide whether a business is a high-risk or low-risk business. Well, it depends on the following factors:
Risk of credit fraud
Chargeback ratio
Legalization
The volume of transactions.
Some businesses naturally fall under the high-risk category owing to multiple reasons. Below is the list of the most common high-risk businesses.
Gambling
CBD
Pharmaceuticals
Bitcoin mining
Forex trading
Travel and advanced booking
Sports booking
One common aspect about each of these businesses is the propensity to fraud and ill-suited behavior.
This is the reason payment processors providing services to these businesses charge high rates. Also, only a high-risk payment processor that has the expertise to deal with such kinds of business payments is deemed fit for handling the transactions of a high-risk business.
How to handle high-risk credit card processing?
Many banks or merchant services providers are certainly skeptical about the genuine nature of high-risk business. In simple terms, merchant account services providers perceive these high- risk businesses as trouble. So your aim should be to present your business as the least troubling business.
The first thing they can think of is convincing the underwriter, who reviews the application of the high-risk merchant account that your business will hardly be a trouble for the bank accounts. This can be done by ensuring your documents and credit card history should represent that your business is least likely to commit credit fraud.
Different ways of improving your business credibility-
Keep sufficient funds in your bank account to show stability
Proper documentation to corroborate the legal entity of your business.
Increased transparency
SSL certificate
Proper website
Moreover, an alternate way of gaining the trust of an underwriter is by ensuring smooth payment processing over two or three months, without any significant chargebacks. This will be sufficient for an underwriter to increase your approved processing volume.
How is High-risk credit card processing beneficial for your business?
High-risk credit card processing has some benefits that are not so apparent. These not-so-apparent benefits can significantly help your business. Let’s find out how.
Little or no risk of account termination – Since you deal with high-risk payment processors, your account would be least likely to get terminated for the sudden increase in transaction volumes or for a periodic increase in the number of chargebacks.
Enhanced Protection from chargebacks and frauds- High-risk payment processors provide the best security measures to ensure your business is shielded well from any kind of fraud.
Easier access to international markets – One of the distinct features of high-risk payment processors is that they don’t restrict their payment processing but also provide access to international payment services.
Enhanced customer support and enhanced payment integration – Unlike standard merchant account services providers, high-risk payment processors provide enhanced customer support for any minor problem so that you can save much time focusing on key issues in your business. Similarly, they are flexible enough to provide easy integration into your existing e-commerce platform.