What Determines High Risk Merchant Accounts for Credit Card Processors
Securing a credit card processor for your business allows you to accept credit and debit card payments. As you know, being able to accept card payments is an absolute must for any business that wants to be successful. Many businesses are able to acquire traditional merchant accounts, however, some businesses may only qualify for accounts that are considered high risk. You might be asking yourself, what exactly are high risk merchant accounts and what determines if I’ll need to use one?
As you might guess, there are several factors that determine the risk level of your business. Keep reading to find out some of the components involved in this determination.
Location, Location, Location
Your business is all about location. These days that means having a strong online presence. If your business doesn’t have a storefront or a physical location, your risk increases. Likewise, if you work entirely from home or your business is only online, your risk level also increases.
You may wonder why an online only business is considered risky, especially as so many people shop and conduct business online. There are a few reasons this type of business is considered risky and often necessitates the use of high risk merchant accounts. The chance of fraud increases when all credit and debit transactions are conducted online and not in person. And without physical ties to a location, merchant accounts consider your business as more likely to disappear or fold.
Big Ticket, Big Volume
Oddly enough, businesses that sell very expensive items, often called big ticket items, or have high volumes of sales are considered to be risky. It seems that businesses that have high revenue streams should be considered more stable, however this isn’t always the case.
If your business conducts large amounts of transactions every day or sells expensive items you may be forced to utilize high risk merchant accounts for your credit card processing. That’s because these types of businesses have higher probabilities of fraud or costly chargebacks.
What’s Your Type
The kind of business you operate also has bearing on whether or not your account will be considered risky. Businesses like online dating sites, auction sites, online gambling sites, adult entertainment, or discount warehouses will typically be considered high risk. These kinds of businesses often deal with fluctuating monthly and quarterly earnings and are considered to be the most likely to end in bankruptcy. High risk merchant accounts will allow you to operate these kinds of businesses, and process payments from your customers.
High Risk, High Reward
If your business is considered high risk, that isn’t necessarily a bad thing. High risk often means high rewards. In fact, high risk merchant accounts can help you get your business off the ground and running.
Allied Wallet specializes in providing payment processing solutions for businesses of all shapes and sizes. Even if you’ve been turned down by other processors, contact us today to discuss your business and your payment processing needs.