If you’re considering taking a merchant account from a bank or credit card processor, the answer may be “a lot of things”. Most banks and credit card processors offer business accounts for all kinds of businesses but some don’t like certain types of businesses.
If your business is high-risk, it could go either way–you might not be able to get merchant services at all, or you might have to settle for a less-desirable plan and rate. This article explains what makes any business high risk in the eyes of merchant account providers.
How to Tell If Your Business is High-risk
It may be hard to get approved if your business deals with sensitive items like alcohol, tobacco or adult products. You may even be denied if you sell certain types of electronic devices such as cell phones or computers because they may be used for illegal activity.
2. Prone to chargebacks
If your customers return merchandise on a regular basis, then your company may be considered high risk by merchant account providers. Although this isn’t necessarily something to be ashamed of (your products may be of extremely high quality), the fact remains that it does have a negative impact on your business’s overall risk profile.
3. High fraud rate.
Any business that has a high incidence of fraudulent transactions will be considered high risk, such as those in the travel agency, jewelry sales and advertising industries. If your business falls into this category, you will have a very hard time getting approved for an account.
4. High ticket value
Any business that deals with products or services that cost more than $1,000 will be considered high risk.
5. Bad Credit score
It goes without saying that a bad credit score will make it harder to qualify for a standard merchant account, but if someone has a credit score above 650 they could still get approved by some top-tier processors depending on their overall business profile.
6. Business Model
Subscription-style businesses– that use recurring billing– may also be flagged as high-risk. This payment model is considered high-risk because the payments are automatic and thus prone to chargebacks.
A high-risk branding isn’t the end of everything for you. If you run a high-risk, the best move is to work with a reputable high-risk service provider who understands your company’s needs.
Author bio:- Payment industry guru Taylor Cole is a passionate payments expert who understands the best high-risk merchant account for small and large businesses. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice cream on his backyard porch, as should all right-thinking people.