Businesses that are classified as “high risk” for credit card processing may already know how difficult it can be to secure an internet merchant account in order to process their customers’ payments in an inexpensive and effective way. On the other hand, some of these businesses may not necessarily be aware of all of the ways may this risk can be mitigated.
Being classified as high risk can be a burden that goes along with operating in certain industries, but there are steps that businesses can take to obtain payment services.
What is a High Risk Merchant Account, and What Businesses are Affected?
High Risk credit card processing refers to transactions in businesses that are deemed by a payment processor to be at high-risk for chargebacks or returns. This kind of risk can be very costly to a payment processor because if the merchant is unable to pay the cost of the chargeback, the processor is responsible for paying the refund to the cardholder out of the processor’s own pocket. Naturally, all else being equal, processors want to limit this kind of risk.
Risk level is determined differently by different payment processors. This means that, businesses can’t always know in advance how a given payment processor assesses their risk. However, there are some factors that will generally come into play.
Businesses that operate in certain industries have a much higher chance of being deemed high risk for ACH processing because their products or services are statistically more likely to experience chargebacks. These industries include, for example, timeshares, pharmaceuticals, health care, and gambling. Businesses in those industries may face restrictions on their ability to get internet merchant accounts.
How Businesses can Mitigate their High Risk Status
For some businesses, the products or services being offered in a high-risk industry may be only a small amount of a business’s offerings. For example, a glassware company may offer just a few items that can serve as drug paraphernalia mixed in among hundreds of glasses, dishes, vases, and other items. By eliminating just those items, such as “bongs” or other smoking pipes from their online catalog, they may be able to be instantly reclassified from a high-risk to a low-risk business.
Of course, for many businesses, changing industries is not a practical option. For these businesses, the solution is to find an internet merchant account provider that works with businesses that are classified as high risk. Also, in extreme cases, eCheck payment processing can be a good alternative, because it is usually much easier to be approved for an eCheck account than for a credit card merchant account, even when a business is considered high-risk. Businesses in industries that are high risk would do well to take their risk into consideration when applying for their internet merchant accounts.
Visit Charge.com or call (888) 924-2743 to find internet merchant account products and services that cater to businesses in industries that are high risk for ACH processing.