What It Means to Own a High Risk Merchant Account

Firms that process payments categorize certain businesses as high-risk. For instance, you will likely fit into this group if you deal with a lot of transactions where the buyer’s card is not present such as mobile transactions.

In part, you can’t blame them for this watchfulness because these methods contribute to almost 50 percent of all fraudulent transactions. The risky categorization also depends on the type of industry and chargeback rates based on your business’s record.

Chargebacks have to do with how prone your business is to refund requests from dissatisfied customers. Processors may also give you a hard time if you experience too many of those.  That’s why high-risk retailers can’t ignore chargebacks, it’s an expensive business mistake that can worsen and bring things to a halt.

So What Could Make You High-risk?

The following reasons may lead to a risky classification:

  1. Your firm is in a regulated sector or a product like the adult industry and tobacco respectively
  2. The nature of the product you sell or service you offer e.g. electronics, software,
  3. Your business involves extended chargeback liability waiting periods like annual subscriptions.
  4. Your sector has a reputation for high chargebacks.
  5. Your business is in the MATCH  (Member Alert to Control High-Risk) list

How Risky Merchants Can Nurture a Long-lasting Account 

The following steps will ensure you get and keep an excellent merchant processor despite your risky classification:

  • Choose the appropriate Merchant processor. Terms and conditions vary across different service providers; others are best suited for certain industries.
  • Go for direct Agreements – these are the legacy merchant accounts that are registered by your business name. They’re appropriate for steady businesses because it is pocket-friendly.
  • Or third-party processing – involves joining a single one merchant account that hosts a pool of individual merchants. Termination is inevitable here so you must be extra careful.
  • Be honest and set targets– Be realistic about the monthly targets you set. Do not set a target that’s too low or one that’s too high. You don’t want to end up with triple the amount you told your account provider or processor you make per month.
  • Sell only what you registered to sell – Any form of fraudulent activity or suspicious dealings may lead to termination. Straying away from what you promised to sell may lead to high chargeback levels.

Final Words

As a high risk retailer, you want to ensure you do not worsen the situation. Knowing what lies ahead can help you tread carefully to avoid account termination.

Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker. He’s just as passionate about assisting businesses to get high risk merchant accounts as he is with traveling and spending time with his dog Cooper.