Credit card processing is an essential service for businesses, especially those that operate online. It refers to transactions conducted by payment processors through merchant account providers. This allows customers to use their credit cards to purchase goods or services from them.
As crucial as these services are, obtaining a merchant account can be easier for some businesses than for others. Occasionally, a business can be considered high risk for credit card processing, which can make it more difficult for the business to obtain a merchant account, or which may affect the fees that the business will pay. Knowing how risk is calculated and how credit card processing works can help businesses maximize their chances of success.
This short guide offers basic information for both small and large businesses to calculate and understand their risk for credit card processing so they can find the internet merchant account provider that works best for them.
Define High Risk for Credit Card Processing
High risk for credit card processing refers to how payment processors perceive the likelihood of a business’s transactions resulting in a chargeback. The reason processors are so concerned about this is because in the event of a chargeback, it is the processor who has to lay out the funds to refund the cardholder, and if the processor cannot recover the money from the merchant, then the processor will have to write that off as a loss.
There are numerous factors that go into this decision, and different payment processors weigh these factors differently. However, the industry in which the business operates is usually the biggest factor. So knowing that a business is in a high-risk industry can give a business owner some idea of how they will be treated when they apply for services with an internet merchant account provider.
These industries can include, for example, gambling businesses, timeshares, firearms, and healthcare and pharmaceutical industries. Businesses in those or related fields may be considered high risk for credit card processing and should know how to mitigate that risk.
How to Get a Merchant Account with High Risk
Of course, the essential services offered by internet merchant account providers are important no matter the risk of the business’s industry. Since the industry is the main source of risk, if there is a way to mitigate this, that is usually the best option. For example, if a sporting good store sells hunting rifles, but these are only a very small part of their business, then just ceasing to offer those firearms could be all it takes to change the business’s risk level from high to low.
If this is not an option, then another choice is to offer eCheck services, since these are typically available even to high risk companies without any issues at all.
Of course, the best thing any business can do if they think they’re high-risk, is to find an internet merchant account provider that works with clients who are considered to be high risk.
Internet merchant account providers offer the services businesses need in order to accept eCommerce payments on their websites and in their stores. Businesses that are considered “high risk” for credit card processing because of their industry can still obtain these or similar services by using smart strategies.
Visit Charge.com or call (888) 924-2743 to view products and services for merchants, including merchants who have been labeled as “high risk.”