What is a high-risk merchant?

March 27, 2019
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No matter what industry you are in, as a business owner you are bound to face your share of risks. If you are a merchant or entrepreneur, you should be aware that there are some factors outside of your control that may hinder your growth process. Dependant upon your chosen business, you could even face some obstacles in applying for bank accounts and merchant accounts.

So, what exactly does it mean to be a high-risk merchant?

In payment and credit card processing, a business may be considered high risk for any number of reasons. Some reasons may include the niche or type of clientele, it could be directly related to how a business operates and its practices, or even the business owner and their own personal finances.  

For instance, if you operate in a business that is plagued by high (fatal or nonfatal) accidents or if your business is surrounded by illegal activity a financial institution such as a bank may consider you a high-risk merchant. If your chosen industry has a high occurrence of chargebacks you would consider high-risk. You may also be considered a high-risk merchant if you have a bad credit history with a credit card and payment processors or investors.

What happens if you are a high-risk merchant?

Unless you are content with your business operating as a cash-only establishment, accepting and processing credit card payments has become the norm nowadays. If your business is considered high risk however, attempting to secure a standard merchant account for accepting electronic payments may be a hurdle that you need to overcome.

If you are a high-risk merchant that has not qualified for standard agreements, your only option would be to work with processors that offer high-risk merchant services. High-risk merchant services, also known as high-risk payment processors, are usually willing to accept liability for any increased risks associated with your business.

Each processor has its own way of calculating risk. In general, however, a risk is usually calculated in terms of chargebacks and fraud; the more chargebacks a business experiences, the higher the risk. There are higher fees with this situation, but taking credit cards is usually a no-brainer and something every business should do.

Just because your business has been labeled high risk, does not mean that it will fail. Instead, it simply means that you cannot work with a standard merchant account, which can make running a business difficult, but not impossible.

We here at Agapay can help you. We have a large portion of our portfolio with high risk clients and have a fantastic relationship with them and our banks. With our hands on service and dedicated support team we make sure even our high-risk clients get the support they deserve to be as successful as they want to be!

If you are having a hard time finding reasonable processing fees, let Agapay get started on it for you!

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