High Risk Merchant Accounts
High risk merchant accounts are often a subject of concern in the payment processing industry. Many banks and other popular companies like Square and Stripe will not offer merchant account solutions to businesses considered high risk, and those businesses are left with seemingly very few processing options. In truth, high risk merchant account services do exist – but, they’re not always the right fit for the high risk merchants they’re paired with for a number of reasons.
There’s hope yet for merchants looking for high risk merchant services. It requires a little more digging to find a solution that really fits a given high risk merchant, but in the end, as a high-risk business owner, you can accept credit card payments just as freely as anyone else.
Q: What is a high risk merchant account?
A high risk merchant account really isn’t any different than any other merchant account. A merchant account is essentially a temporary bank account that’s used to keep track of your credit card revenue before it’s deposited into your business’ bank account. Fees for different services are debited from your total amount, and you’re left with a percentage of it at the end of the day.
The credit card processing fees taken out of your revenue are as follows:
- Interchange – The fixed cost of accepting credit cards, which varies from card to card (and there are about 350 of them total). This comes from card-issuing banks.
- Assessment – Another fixed charge, this time from Visa and MasterCard. This is very small, about 0.11-0.12%.
- Discount or Markup – The charge from the credit card processor.
- Other Fees – These include – but aren’t limited to – international charges, PCI compliance or noncompliance fees, and nonqualified fees.
High risk merchant accounts have the very same fees as conventional merchant accounts. As costs from Visa, MasterCard, and card-issuing banks always stay the same, your processor may levy extra charges against you to accommodate the risk they take on by processing your payments, but no one else will charge you anything extra because you’re high-risk.
Q: Why is your business considered high risk by processors?
In order to define high-risk, we need to take a look at that word, risk. Risk, in this case, is taken on by a credit card processor in handling your transactions. That risk comes from a variety of sources, but it’s usually due to a stigma against your industry of choice, unfortunately.
- Your services are of dubious authenticity to some (for example, if you’re a psychic, if or you sell non-FDA-approved nutritional supplements)
- It’s hard to prove you rendered your services (for example, because they aren’t tangible and their effects aren’t immediately apparent)
- You have a history of chargebacks (for example, because people may be embarrassed to reveal they used your services – or, because they forget they have)
- There’s a chance people or organizations could be shunned for doing business with you (for example, if you sell tobacco, vapes, adult novelties, pharmaceuticals, firearms…)
Q: What industries are considered to be high risk?
Industries considered high risk include (but aren’t limited to):
- Adult merchant account
- General MOTO credit card processing or MOTO merchant account
- General eCommerce
Not everyone can handle businesses in these industries – but, high risk merchant processors can.
Q: What do you do if your high risk merchant account is terminated or you’re denied merchant account service?
Having your high risk merchant accounts closed unexpectedly or even having your application rejected can be incredibly frustrating and stressful, putting it lightly. The important thing to realize is there are pragmatic steps you can take before something like this happens to ensure you endure minimal hardship:
- Search for credit card processors who cater to high risk merchant processing and keep their information on file. High risk merchant account providers aren’t terribly difficult to find, and, although not all of them will be perfect for you, it will be good to consult your black book of sorts in a pinch.
- From those processors, seek out ones who offer high risk merchant solutions similar to the one you use. You don’t want to downgrade to a terminal if you’re already using a favorite payment gateway or a software plugin solution.
Using these steps, you’ll be much better equipped to find the best high risk merchant account for your business. Remember: It’s important to go through these steps before disaster strikes.
Q: How can you qualify for lower rates if you’re considered a high risk merchant?
Despite what you may have heard, not all high risk merchant accounts are subject to exorbitant fees. High risk accounts can pay significantly less, in fact, if they utilize payment solutions that take advantage of certain industry rules.
Any high risk merchant can pay less to accept credit cards if they:
- Use an integrated processing solution or a software plugin to process credit card transactions on-the-fly.
- Use a virtual gateway that optimizes credit card interchange levels to process credit card transactions.
Q: Which high risk businesses can process credit cards with Century Business Solutions?
We have helped thousands of businesses that are considered high risk and we are confident that we can help you too. We currently can process the following business categories:
- Adult novelties
- Fire Arms
- Vape and e-Cig
Q: How to apply?
Please fill out the form to the right and let us set your business up for success!