Difficult to get accepted

“Unfortunately, many High Risk Merchant Account never get approved.” – lawposter.thcmn.com

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High Risk Merchant Accounts are more difficult to obtain than standard account. The very fact that you are running a high risk business requires you to provide more documentation and assurance than normal businesses. Even after that, you won’t always get accepted.

Take into account the minimum value of business that most account providers will expect you to do, and it becomes even more difficult. Some might not give you an account unless you make transactions to the tone of as much as $50,000 a month. That’s a high number.

Besides, new upstarts are not granted accounts easily either. Most account providers are vary of new upstarts and will flatly refuse them an account. This makes life difficult for any enterprising individual who wants to set up a risky internet business.

High fees

“…you might have to pay a start up fee that is usually much higher than a regular account would charge. Of course, you will also be charged a higher credit card processing rate…” – WebMarkSolutions.com

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Then there are the high fees associated with High Risk Merchant Accounts. Normally you can expect fees to be about two to three times higher for high risk account compared to standard accounts. These fees can be a major setback if your profit margins are already low.

Holdbacks and Chargebacks

“If you read the fine print in your merchant account agreement, you’ll likely see a provision allowing your provider to withhold cash from your receipts, even without telling you.” – blogs.business.com/whatworks

Even after paying the ridiculous fees, you don’t get your money immediately. Many account providers are known to apply a holdback on your payment so that you have to wait for as long as one month to actually be able to use your money. Oh, and even after that you won’t necessarily get all your money. They might issue a minimum rollover of about 5 to 10%, so that you have to maintain a certain minimum balance in your account.

Then there is the issue of chargebacks. Even with a high risk account, there is a certain level of chargebacks after which the account providers start disliking you! More than a certain level of chargebacks (usually in the 5% range) and your account is automatically closed.

It’s not all downhill

There you have it, all the disadvantages associated with High Risk Merchant accounts. But coming to think of it, despite all these disadvantages, there’s no beating High Risk Merchant Accounts when it comes to security for your growing business. For businesses that involve gambling (legally), escort services, dating services or other activities listed here, high risk accounts are the only option unless you want to see your account shut down every other month. These accounts offer peace of mind and the ability to take risks in your business without worry of complaints from your account provider. High Risk Merchant Accounts, for that reason, are indispensible for enterprising individuals or ambitious businessmen. So if you have friends telling you to stay away from high risk accounts, those ‘friends’, or at least their advice, are the ones you need to really stay away from, since they clearly have no idea about the utility of such accounts.

Many online businesses such as a gambling business, adult products and many other affiliate products are considered to be high risk businesses as there are many chances of refund or chargeback claims from unsatisfied customers. A high risk business may also constitute a business which does not have an establishment and the bulk of their business is carried out over the phone.

Who need a high risk merchant account?

A high risk merchant account is mainly needed by those businesses that are very prone to receive chargeback claims from their customers very often. A business may also opt for a high risk merchant account in case they think that their business in spite of having good reputation will attract a good number of refund requests. Any online computer store or retail store may be deemed as a high risk business who need high risk merchant accounts and their added features. Wholesale buying clubs and other reputable businesses also need high risk accounts. Thus a business requiring a high risk merchant account does not essentially mean that the products of the business are poor or their services are not at par with the set standards.

The different services offered by these merchant account providers:

The different services in favor of high risk businesses provided by these accounts include:
• A complete scrutiny of the complete business proceedings, the credit history checking and the modes and method of payment and delivery. These require special attention and analysis because if there are flaws and glitches in them, the high risk merchant accounts have the power and the capability to solve them from the root.

• Allowing you to accept various modes of payments such as credit cards, debit cards, e-checks, etc. This process ultimately reduces the number of chargebacks due to the varied payment modes.

• Complete training in bookkeeping and reporting of different transaction so that they can be used in case of a chargeback. They train you how to keep invoices, and records of various transactions. The billing information, credit card information and the tracking information are very vital in this case.

• Complete risk status report and chargeback analysis and data entry of the repeated chargebacks from the same account or credit card.

• Thorough review of chargeback status from the previous credit card processing companies. They also review any criminal records.

• Finally, the most important service is the direct deposit feature which allows you to take the payment directly to your bank account via the merchant account and the gateway.

Some special web-integrated features:

These high risk merchant accounts also provide web-integrated services which help you to provide the best service to your customer. These include the building of a shopping cart for your website and the linking strategies with their own gateway or a purchased or leased gateway. They also provide marketing tools such as the recurring billing feature, integrated product design and shipping fees, etc.

All in all, these high risk merchant accounts do take more fees, but the services provided by them are unmatched and help you to run your high risk business efficiently.

High risk merchant account being compulsorily required by business people dealing with travel services, online dating services, online sale of replica goods and many more, its risk ratio is quite huge. It is known that these businesses always accomplishes high revenue, and thus leads to equivalent risk. In most cases, business people dare to take risks and moreover they remain ready to overwhelm the time with ease. They handle the prevention systems and other cutting edge preventions to find a supportive credit card merchant deal.

Since you are here, you must be well aware of a merchant account. It is a line of credit by which a merchant can accept credit and debit cards as their main mode of payment. Now, there are some businesses deemed as high risk which need special merchant accounts known as the High Risk accounts. Let’s see how it works and what it is.

Why the term ‘High Risk’?

There are some businesses such as adult products such as eBooks or sex products, online gambling and trading agencies which are popularly known as high risk businesses. This term has been annotated to them because of the simple reason that most of the products or service transactions offered from their website are very likely to call for a refund or legal claims from the customer. If that was to be handled with a simple merchant account then it would have been tough to handle so many chargeback and refund request as also legal claims. That’s why came the concept of High Risk accounts which have a different fee structure, generally more than original merchant accounts and which provide many features due to which you are less prone to these attacks in these High Risk industries.

Situations for a High Risk:

Various situations may lead to a merchant account being classified as a High Risk account. The main situation that arises is the case where a stolen credit card is used often for the same business and hence calls for a greater number of chargebacks. Any business which has a very high number of refund requests will be deemed as High Risk business. In E-Commerce this fraud can be elevated to a higher extent because these are generally card-not-present transactions where just the card details are used. Hence the chances of such fraudulent transactions increases manifold. Also a business where customers are not satisfied with the products very often will be considered as high risk. A debit card transaction with insufficient funds is also considered to be in the periphery of a High Risk Merchant account.

Features of a High Risk Account:

There are some additional features in a High Risk account so as to protect the merchants as well as the credit card issuing banks and the acquiring banks. The fee structure for these accounts is much more than normal merchant account. To protect the integrity of funds, there are additional safeguards to route the funds correctly to the desired merchant. One such tool used by the merchant account credit card processing companies is delayed merchant settlement. In this case the funds are put in hold for a slightly longer period than the normal ones. Also there is a reserve account in which around 10-15% of the total merchant settlement amount is kept in hold for 1-6 months to cope with any unforeseen chargebacks. Once the reserve period expires, the funds are transferred back to the merchant’s bank account either by deducting the interest for the specified period or without doing so.

If you consider that your business is highly risk-oriented, it is hard and not probable to get a usual e-com merchant account. At this point, the high risk merchant account matches the course perfectly right. This is easily accomplishable with the international provider’s ccNetPay. With many businessmen dealing with, some might prefer taking risks, whereas the others will not sign so. Such risk taking businessman will stumble on to acquire some preventive system to keep their risky business safe and working. Depending upon the business category and risk involved, the preventive system will be guarded to govern it out!

By and large the most important risk in an online business processing credit cards is the chargeback. It is the reversal of the payment made by the customer back to his account. A claim for a chargeback may arise in situations where the product delivered is faulty or the product is not as promised, or there has been processing errors. But by far, the most important factor in this is the case of fraudulent transaction which takes place usually with stolen cards.

The threats:

The threats posed by a chargeback are very few but are very influential in ruining your business. A chargeback on the first hand can skyrocket your operating costs since these are fees which are generally not taken into account in the normal proceedings of a business. Since operating costs increase day by day, your gross margin also decreases. You business thus suffers a huge setback with these chargebacks as you need to pay hefty amounts for them. The maximum risk posed by these chargebacks is the termination of your merchant account. Credit card processing companies generally don’t want to do business with merchants who have high risk businesses or are very prone to chargebacks as they also suffer losses.

Some easy to follow steps:

I am not going into the technicalities on how you should avoid chargebacks. I am just going to put forward some easy to follow steps to avoid the growing number of chargeback for your business. Here are a few of them:

• Follow a flexible return policy in case your customers are not satisfied with your product or service. It will discourage the customers from going to the issuing bank for a chargeback claim. They would like to settle the matter with you before going for such heavy legal procedures. Maintaining good customer relations and appointing a proper customer care executive generally solves these problems.

• Although, it is very foolish not to keep your online store open at night, yet be sure to scrutinize the late night transactions with care. Validation and verification of late night orders should be done very carefully as fraudulent transactions in an online business are more likely to take place late night.
• Remember, in any kind of business, be it online or offline the transaction is not completed as soon as the payment is received and the product is delivered. Proper maintenance of products and ensuring the proper delivery is also essential. In an online business with a merchant account one can use a follow-up email to ensure that the customer has received the product in good condition and that he is satisfied with the product.

• A credit limit is a very good option as fraudulent transactions from stolen credit cards are generally made in bulk. Hence setting a credit limit for a particular credit card may solve the problem. Once this limit is reached, it is suggested that you do an independent verification and call the customer personally.

• Finally, take note of the credit card and the billing information of a customer who has claimed a chargeback more than once. It helps you save recurring chargeback.

To be smart in dealing with chargebacks, you should understand and know how to tackle and overwhelm them. Remember, if you frequently happen to get huge chargebacks, your account might get suspended and even at times, you’ll be denied for merchant account service access. Beware that you are not frequently chargeback, since you can give a halt to all those queers and risks. If you are one among the merchant, who strives to control chargeback, then better adhere the defined precautions and control the chargeback shot.

A high risk account is a kind of merchant account which is mainly used for high risk online businesses such as gambling, lottery, computer sales, adult goods, etc. which demand for a high percentage of chargeback or frauds. There are several other criteria according to which the businesses are deemed as high risk businesses. These businesses generally can’t opt for a normal merchant account for credit card processing and have to go for a High Risk Merchant Account which charge more fees than the normal merchant account and provide much more features. Here are 5 tips or criteria according to which these high risk merchant accounts can be chosen.

Certification of the Company:

The company where you are planning to apply for a High Risk Merchant account needs to have proper legal and authentic certification. This should be your primary criterion as managing High Risk accounts is not the cup of tea of new players. Look for the FDIC registration as the initial scrutiny checking process. After that, go thoroughly through the legal disclaimer, term and conditions and privacy policy of the company. Only subscribe to those companies who have authentic authorization for doing such a business.

Reputation and trustworthiness of the company:

Look for a company who is reputed in the market in providing High Risk Merchant Accounts. You can consult your business colleagues for the best possible option for your business. You can simply Google their name and look for the financial history and any complaints by the existing account holders.

Number of years in business:

Remember, the more the number of years a company is in this business, the more is their experience. They generally apply this experience and expertise in solving complex issues with fraudulent transactions and chargebacks due to which both the company and the merchant may suffer afterwards.

Service round the globe:

It is better to choose a high risk merchant account provider whose reach is manifested globally across all nations. This enables the company to accommodate international clientele hence do not prove to be a hindrance in the global reach of the business. Managing the international clients in case of any disputes is a very tedious thing to do and hence it is better that you look for a merchant account provider whose reach is global.

Low transaction fees yet methodical processing of transactions:

Though the necessity and priority of a High risk account is more, yet the transaction fees should not be exorbitantly high which may ultimately lower your ROI after a certain period. So choose the ones who provide systematic processing of all the transactions yet offer a low transaction and chargeback fees. The ability to solve the various types of disputes that may arise in future should also be examined by taking test cases and doing your research via the web. Don’t go for the ones who charge disproportionate fees and ultimately render low quality service which you may see at the end of the first month itself. So choose your High Risk Merchant account provider wisely.

To get the high risk merchant account, you should fulfill some basic traits, where the first and the foremost is you should be the principal owner of the business. Also, you should be a native US resident with at least 18 years of age. Besides this, you should also hold a US business or personal checking accounts, since all these valid attributes are essential to set a high risk merchant account type. The application process is quite simple, where you can get it done in couple of click through! For any questions and inquires, you can give a call to our customer service executive connecting them Toll Free.