September 19, 2019

Are you a High Risk Merchant? Here’s what you need to know

In the event your business is considered high risk, attempting to acquire a merchant account to accept electronic payments my not be so standard.

Let’s take five minutes to explore the world of being a high-risk merchant and how to acquire a high-risk merchants account even when it appears to seem impossible.

What is a High-Risk Merchant Account?

As a matter of first importance, in the event that you want to accept credit cards as a form of payment, there will be an expense related with doing as such. The major card networks (Visa, Mastercard, Discover, and American Express) charge trade expenses to utilize their system and the Merchant Service Providers (MSPs) charge preparing expenses to associate the card issuing bank to the obtaining bank through installment processors.

Since the merchant account provider and the processor assume the majority of the risk during a transaction, they charge expenses for their administrations over the trade expenses that the card systems charge. As any keen business that goes out on a limb would do, these organizations attempt to their limit and minimize risk by enforcing higher premiums on merchant accounts that are deemed risky.

A high-risk merchant is a business or an industry that is infamous for chargebacks and fraud, verges on the borders of legitimateness or is viewed as risky by affiliation.

How do I Know if I’m a High-Risk Merchant?

Much like applying for a loan, when an entrepreneur applies for a merchant account, there is an underwriting procedure the account provider will experience to assess the risk of adding your account to their portfolio. Here are some of the points to take into consideration when applying for a merchant account are:

• Your personal credit history.
• Company financials.
• Number of years in business
• Merchant account history such as if you ever had a merchant account before. If so, do you have a history of chargebacks and have you been blacklisted on the MATCH list or Terminated Merchant File (TMF). Are you in good standing?
• Type of business or merchant category code

What is Considered a High-Risk Business?

Here is a list of high-risk industries and business types that will most definitely be flagged for high-risk credit card processing.

• Pharmaceuticals
• CBD & hemp Industry
• Electronic Cigarettes and Vape shops
• eCommerce
• Gaming
• Firearms
• Adult entertainment
• Travel and Lodging
• Network marketing
• All card-not-present transactions

I’m a High Risk Merchant, What are My Options?

If your business falls into one of the high-risk categories we mentioned above, don’t worry, all is lost. The good news is, there are a lot of merchant service providers that specialize in high-risk merchant accounts such as Milk Capital.

In Conclusion

Regardless of whether your organization is viewed as high risk due to the nature of the business or if your account qualifications are not exactly outstanding, do not lose confidence. If your business is hailed as a high-risk merchant account, it might be all the more testing and require stronger cash flow to get a processing account, but it's certainly feasible, contact us here at Milk Capital.