When looking to engage credit card payment processing services, it may come as a shock when the processor labels you a high-risk merchant. A high-risk merchant account is usually labeled so because the industry exhibits certain characteristics that make it risky to the processor and hence they have to assign the business this category to minimize their own risk. They will take into account the number of years you have been in operation, history of chargebacks, type of business and company financials among others. They will also take into account your personal credit history. The factor that most determines if you are high-risk is the type of business you operate. This will also affect the kind of rates you pay for every credit card transaction you process. Here are several reasons why you could be a high-risk merchant:
1. Recurring Payments. Subscription service companies are considered a high-risk merchant. If your business model is based on recurring payments, you are most likely labeled as a high-risk merchant. This is because these types of businesses usually result in a higher than average chargeback claim. This is usually because the customer is unaware the recurring payments are occurring and so, fights them.
2. Entertainment business. If you are in the entertainment industry then be assured that you are most likely a high-risk merchant. For example, if you sell tickets to events in the future, then you are high risk because the event itself could be canceled or you sell them in advance, which gives your customer more time to request a chargeback.
3. Travel-based businesses. If you offer travel services, you tend to be high risk because the customer has time to request a chargeback. They may request their money back if their expectations are not met as in your description of the package, services or even products.
4. Large transaction amounts. If your business engages in large transaction amounts (over $1000) then it can be classified as high risk. The larger the amount, the more likely a customer, ethical or not, may try to fight it with a chargeback.
5. Finally, if your account provider is not sure what to expect from your business if you have no credit card processing history, or it has some qualms about its legality (selling alcohol online), then you may be classified as a high-risk merchant.
Agapay prides itself on working with ethical and moral clientele and businesses. We also are proud to support our high-risk clients with excellent service and support as they navigate the waters of credit card processing. Let us help you make the most out of your business!
