High-risk merchants have to struggle a lot with the threats of chargeback, data infringement, financial fraud, friendly fraud, etc. They have to be very sure about their payment processing because the safety of the customer’s data and money is of utmost concern. It is why the credit card processing for high-risk merchants is so special for businesses.
Credit card processors design their solutions to match the commercial requirements of unsafe business types. The concerns of the business owners can be solved simply, as the technology is enhancing day-by-day and can take care of every concern of the merchants.
Are you a high-risk merchant? If yes, then this blog will help you get an insight into the nature and features of high-risk credit card processing.
What is the meaning of high-risk credit card processing?
High-risk credit card processing is a financial product for merchants with a business that is considered to be a part of an unsafe industry. When a customer makes a payment, the funds go through the bridge of this credit card processor. From here the money finally gets transferred to the merchant account.
The industries like Forex, gaming, adult entertainment, online travel booking, etc. are considered as high-risk. The reason is, in these industries, customers frequently ask for a chargeback or refund. For example – it is common for people to book online tickets for air travel or book hotels through online booking. Later they cancel the booking giving varied reasons.
Why high-risk credit card processing is important for a business?
Credit card processing for unsafe industries has many uses for merchants. Facilitating safer payment processing is not the only role it performs. Several other activities are also there that card processor companies do for the comfort of the high-risk merchants. Amald , a card processing solution provider has all the following features.
Business gets the merchant account –
A credit card processing company assists its business clients to qualify for a merchant account in an acquiring bank. We all know that usually, the businesses with unsafe industry types do not get a merchant account in their traditional banks. A business needs to have this account because otherwise, it will have no place to receive the money from the customers.
3D secure processing helps reduce chargebacks –
Credit card processors always ensure that the customers of a merchant make payments in a safer atmosphere. The payments are backed-up by the well-known 3D secure technology. The customers fill in their financial details to make a payment and in exchange, they receive an authentication code. They enter that code which finally accepts their payment and transfers the funds to the merchant.
Helps in improving business goodwill in the market –
A business that offers safety to its customer’s money and has a low number of chargebacks will have a good image. It further helps a merchant earn more profit. We all know that financial insecurity is among the biggest reasons for depression in people nowadays. Businesses need to have a safer payment processing infrastructure to make their customers feel safe about their money decisions. Every company that succeeds to make its customers feel good, becomes a brand.
What factors do credit card processors count to consider a business high-risk?
To make a high-risk credit card processor work for your business, you need to prove that you fall under the category of a high-risk business. Several factors in your business can prove that.
Possibility of fraud and chargeback –
Chargebacks and fraud exposure are the two prime factors in a high-risk business. The chargeback ratio of more than 1% brings a merchant under the category of an unsafe commercial entity.
Similarly, a merchant from an industry prone to fraud finds a place in the list of lesser safe industries. However, with a very high chargeback percentage, a merchant may get rejection. But at the same time, there are credit card processing companies willing to work with the businesses even with a chargeback of 3% to 4%. They in fact suggest ways to reduce the number of chargebacks. Amald is one of them.
Monthly volume of money transactions –
A business with a minimum of $100,000 per month comes under the tag of a high-volume business. Only such businesses can be considered as high-risk. If you are applying for credit card processing, you will have to be sure that your company processes this minimum amount every month.
The higher the volume, the higher is the risk of data theft, fraud, chargeback, etc. The credit card processor gets into the scrutiny to compare between the monthly volume and the chargeback ratio. The merchants must work on a smarter chargeback policy to get approved by the processing company and then the acquiring bank for a merchant account. It has a direct impact on the fee and charges applicable to get the credit card processing service.
Types of products and services –
Oh, for sure this is going to be the prime subject of interest for the credit card processor. Several types of products and services are illegal and thus they come under the tag of unsafe businesses.
Pornography, online sale of marijuana, illegal subscription of drugs, etc. are some of the relatable examples. These are the high-risk businesses and the credit card processors have their own rules and policies to accept or reject such merchants. Such merchants should not hide any information in the hope to get acceptance. That makes the situation worst because the more transparent and honest a merchant acts, the more are the approval chances.
Credit score and credit history –
These two factors are ubiquitously important to get any sort of financial service or product. The credit score of the business owner and the business are important and also the past credit records.
You must pay attention to your financial behavior as well as your company’s financial behavior. From timely payment of utility bills to the punctuality of paying the debts, all factors are important. Pending debts, degradation in credit rating, especially in the last 6 months can be a risk on your chances to get approval from a credit card processor. A rejection here will ultimately close your doors to the merchant account.
High-risk credit card processing is as vital as a lifeline for an unsafe business. But with few arrangements, it is simpler to find a processor that fulfills the commercial requirements of a company. You should know that now it is not as complicated as rocket science to get acceptance from a credit card processor.
The payment gateway companies are getting advanced in technology. Today, many credit card companies such as VISA are working on payment methods where people can pay even through cryptocurrency. Then getting to work with a processor and getting a merchant account are certainly simpler tasks. Are you looking for support for credit card processing? Amald can help you with relatable solutions and can also help you get global customers while expanding your business.