High-Risk Merchant Account – How to Avoid Account Termination?

What is merchant account?

A business account in which the financial institution allows the account holder to accept payment through online money transactions using credit/debit card is called a merchant account.

What is high-risk merchant account?

The merchant account with a high risk like frauds in transactions is considered as a High Risk Merchant Account. When such risks the involved the merchant bank charges high premium and also charge extra fees for their services and card networks charge to try and minimize the risk involved.

Apply for a High Risk Merchant Account

When are you high-risk merchant?

Following are the few possibilities when your account is considered a High-Risk merchant account:

1. If you start a brand new business, there is no previous online transaction processing history.
2. The reputation of the business, if the business is anytime previously known for dissatisfaction of costumers, transaction frauds, etc.
3. Low Credit Score, you are considered a high risk merchant if your credit score is low as there are possibilities that you find it hard to repay your negative balance.
4. Service Provision, if in case there frequently is a lengthy time span for your business to provide proper service or deliver a product to the costumer, your business may be categorized as high-risk.
5. Transactions over phone, if your business uses a virtual medium for transactions this causes the costumer not being aware of details.
Along with all these there are a few more criteria’s of getting a status of high-risk merchant account, like- Chargeback History, Frequent refunds, Automated Billing, etc.

Which type of businesses are included in High-Risk Status?

Following is the list of High-Risk Merchant Consideration-
1. Adult Entertainment
2. High Volume Transactions
3. Pharmaceuticals
4. Travel and Lodging
5. Gaming
6. Marketing through network
7. Firearms and so on

How to avoid?
There are chances depending on the reputation on your account, the account may get freezes for a short span or permanently in which you cannot have any transactions in this account.

The best way to avoid all these problems is to be completely upfront and honest in the Merchant Account Application about the services and products you will provide the customers through your business.

Why are we high risk merchants?

Operating a business in a “high risk” industry creates a number of problems when it comes to payment processing. Visa and MasterCard categorize certain organizations as high risk depending on the risk they would impose on a card processor or bank. Other reasons why a processor might consider a company high risk would consist of their previous processing history. Normal low risk businesses that have not been operated properly are able to be labeled as high risk.

Numerous high risk industries are considered higher risk than others. These industries will need to obtain an offshore account. Other industries that could be considered medium high risk might be able to secure a high risk domestic merchant account instead of going offshore. There are a couple different reasons why this might take place including; large per transaction size, large monthly volume, selling methods of the business or operating in an industry prone to fraud or chargebacks.

High per ticket merchants become considered high risk because after a chargeback occurs the amount charged back for a single transaction might be ten times what the average transaction amount is for a small to medium ticket transaction. The merchant must have ten times more money in reserves to be ready for these potential situations. Since there is no guarantee the merchant will have these funds available they are categorized as high risk.

Large volume merchants can be considered either high risk or low risk depending on the products or services they are selling. The majority of high volume merchants operating online are considered high risk mainly because these businesses have third party affiliates selling their products/services for them. Companies with affiliates are usually considered high risk.

How a business sells their services is a huge determining factor on what type of account that merchant will be eligible for. Outbound telemarketing merchants are examples of merchants that are considered high risk because of their selling methods. These businesses use hard sell practices or scripts that promise unrealistic results from their products or services.

Industries that are prone to chargebacks are also grouped in the high risk category. These industries would include adult, debt consolidation and loan modification. Problems that arise from these companies are the fact that they are prone to high chargebacks. Some because of fraud and stolen credit cards and others because of low customer satisfaction.

Businesses with a poor previous processing record will also be deemed high risk by credit card processors and banks. A high number of customer complaints and disputes or chargebacks will cause a merchant’s processing history to be affected negatively. A weak previous history shows a higher risk to processors. There is a higher chance of the merchant defaulting and not being able to cover chargebacks and refunds.

High Risk Merchants is able to place most high risk merchants in almost every industry. Contact one of our helpful customer representatives to assist you with your application for a High Risk Merchant Account or ach processing account.

How Do I Get Instant Approval On High Risk Merchant Account?

Businesses are inherently risky. One cannot run a profitable business without some kind of risk involved.

Getting approved for a merchant account is a tedious process, especially if your business happens to fall under the high risk category.

Banks are wary of approving high risk businesses because of the risk involved. Even if the process is simpler, there are some strict guidelines and policies that you need to adhere to. Unsurprising, given that the bank is taking a substantiate risk. It is their responsibility to minimize risk which is beneficial for you as well as them.

High Risk Merchant Account –

There are also instances when you have been rejected over and over again for a merchant account. Wondering what other options you have? Call high risk specialists like IBS! Merchant Account providers who specialize in high risk merchant accounts understand the difficulties faced by such merchants. They guide you through the application process and get you approved without much hassle.

Now, as a merchant you need to take certain measures before settling for a merchant account provider.

Do your research.
Make sure that the provider offers services that are compatible with your business
Be aware of those asking for an application fee. No fees are charged until the actual transaction process begins.

IBS does not charge any sort of fees until your high risk merchant account is up and running to process transactions.

-You will find thousands of providers ready to take on your business with claims of getting you ‘instantly’ approved within a day or even a few hours. Be careful when dealing with such.

Being an experienced industry player, IBS can assure you instant approval can only mean a minimum of 2-3 days. And yes, it is possible to get approved within that timeframe.

Accelerate your High risk merchant account approval process –

Getting approved within a day is simply unrealistic. Merchant accounts take time to get approved, especially a high risk merchant account at that. Sometimes, you can get approved within a week or the process can very well get dragged into next week. Still, here are a few tips you can follow to accelerate this process to get an easy and instant approval.

Honesty is the best policy – Be honest about your business from the get go. Provide a complete disclosure to your provider. Be completely honest about the kind of services & products you offer. While a high credit score is preferable, it is okay to have an imperfect credit history. You may be tempted to leave out a few minor details but the underwriter can instantly catch such discrepancies and cancel your application. Give detailed, transparent and clear records of your business and be ready to answer any questions that the underwriter may have. This makes your business trustworthy and has a positive influence during the final decision.
Keep your KYC documents at-hand – Be sure to gather all your financial documents and submit them together for the underwriting process at the earliest. While you can also submit them in batches, sending them at once can expedite the process and make you look organized.
Valid Company Information – Be very clear about the type of service you provide and your place of operation. Make sure your personal as well as company details including addresses and customer service contact numbers are valid and correct. These details should match your application information as well as wherever you have advertised your business; be it online or print.
Try to minimize your risk factors such as charge backs – Charge backs is one of the reasons why your business maybe termed as high risk. High charge backs are a threat to high risk merchant accounts. They possess a risk to the provider as well as the account holder. Try to minimize them as much as possible for a better chance at approval.

Partner with IBS for High Risk Merchant Account Approval

International Bank Services (IBS) specializes in High Risk Merchant Account solutions for risky ventures. We have an approval ratio of over 95% in merchant placements. With several years of strong banking relationship with several acquiring banks all over the globe, we provide secure and reliable payment processing solutions for all-risk businesses. Give us a call to talk to our representative about your business and we’ll employ our best resources to get your transactions online.

Hurry up and enquire today for further assistance!