Why are High Risk Merchant Account Fees so High?

If your business has already been identified as high risk, you might be aware of the difficulties you are going to face while approaching a decent merchant account provider. The probability of a risky business getting rejected by regular banks and processors is high. In fact, if your business deals with products and services like CBD Oil, Forex, Online dating, Adult content, Gambling, etc then you may as well forget about acquiring a regular merchant account.

This leads to businesses then opting for the next best choice – High Risk Merchant Account Solutions. A high risk merchant account is mostly similar to a regular merchant account with the most notable exception being, the rates associated with the former.

When approaching a processor for a merchant account, you may either get outright rejected or your high risk business will be charged higher than what is charged for any other regular business.

Why, then, are High Risk Merchant Account rates so high?

The simple reason why you are charged higher than regular is because of the risky nature of the business you operate. A merchant account is essentially a credit given to you by your processor. When a customer purchases an item and makes the payment, the bank or acquirer deposits the amount to your merchant account and collects it from the customer’s card at a later date. This means a merchant has access to funds before the payment is actually made by the customer.

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Now, after the funds are deposited into the merchant account and when the payment is collected from the cardholder, a lot can go down in between like frauds or chargebacks which puts the processor at a risk. High Risk businesses especially are notorious for racking high chargebacks.

In such cases, processors will obviously look after their interests first to try and avoid any chances of losses. Hence, merchant account providers raise their rates to balance out the risk posed by your business. This is why high risk merchant accounts are so expensive.

While finding a merchant account for high risk business might prove to be a task, you still have the power to negotiate before settling for the right one. Always do your research and ask questions to a merchant account provider. Read the terms and conditions of your contract before signing on the dotted lines and check for any unnecessary hidden fees. Go for a high risk merchant account that fulfills all your requirements at a fair rate.

Tips on How to Avoid Chargebacks for Small Businesses

In this fast-paced world, it becomes imperative for a small business to be flexible in order to keep up with the constantly evolving technology and accommodate customer demands as well. The key responsibility of a business is to be always aware of the customers’ needs and requirements. And the one thing that customers look for in any business is the variety of options available. Whether it is among products or payments, customers enjoy having options to choose from.

Hence it becomes a priority for a merchant to employ the best payment methods available to match your customer preferences. Accepting credit cards as a mode of payment is one of the most important decision that a small business has to make.

And while there are many advantages to accepting credit cards, something that a merchant should be wary of is its one major drawback – Chargebacks!

What are chargebacks? A chargeback occurs when the merchant charges credit card for transaction but the cardholder or customer disputes it. While chargebacks are genuine, some are caused with a malicious intent to rob the business.

Regardless of whether you are a small business or operate a huge firm, chargebacks can be equally daunting for both costing businesses over $4 billion annually.

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Excessive chargebacks can lead to shut down of your merchant account and tarnish your reputation among credit card processors.

But do not worry! There are ways to recognize, prevent and fight chargebacks to ensure smooth transactions for your small business.

How to prevent chargebacks for small businesses?

Check whether your merchant account provider offers chargeback protection tools to analyze, manage and prevent chargebacks.
Integrate a 3D secure payment gateway with your merchant account which gives an additional layer of protection during credit or debit card transactions.
Validate the cardholders’ identity and accept credit cards from authorized customers only.
Avoid misrepresentation and false advertising of products and services. Be transparent about what you sell.
Employ a strict & clear refund policy.
Provide an excellent customer service. Respond quickly to complaints or queries.

While a merchant cannot completely avoid chargebacks, they sure can implement necessary measures to reduce it.

Why you need an Offshore Merchant Account for CBD Business?

The CBD Industry has been growing in leaps and bounds with it being predicted to amass over $3 billion annually. Looking at the figures, it may certainly look like a great business opportunity. However, the legal and banking issues surrounding the industry can be a cause of serious concern for any merchant.

If you operate a CBD Oil business, you are more than aware of the obstacles faced to find a decent domestic bank or processor who is willing to take on your business. Even with CBD products being legalized in several states, domestic processors are still wary enough to shoo away businesses who sell them. It is especially difficult for online stores selling CBD or related products to acquire quality merchant account solutions.

Unsubstantiated health claims, legal uncertainties, changing industry regulations, compliance issues, little or no knowledge of the industry and reputational risks are some of the reasons why opening a domestic merchant account is not easy.

Open an Offshore Merchant Account for CBD Business

Many CBD merchants opt to go for Offshore Merchant Account Solutions when finding regular credit card processing solution seems impossible. While going offshore is not the first choice for many merchants, the benefits and advantages provided by an offshore merchant account can certainly be worth it in the end.

An offshore merchant account is a merchant account that is established in a non-resident country. So if you operate a CBD business in US and cannot find a domestic processor in your country, merchant account providers like IBS offer Offshore Merchant Account solutions that will allow you to accept credit card transactions from your customers.

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Unlike many domestic banks and processors that make it extremely difficult for CBD merchants to open an account with them, applying for an offshore merchant account is hassle-free. Your chance at getting approved by an offshore provider is way higher especially since you fall in the high risk category.

Advantages like multi-currency processing, business expansion, low or no taxes, no monthly volume caps, etc. will only allow your business to flourish.

Selling CBD products usually means high volume transactions which means they, online stores in particular, cannot afford to have their transactions stopped midway simply because they reached their monthly processing limit. Here, Offshore Merchant Account offers an ideal solution to this problem with no transaction volume caps.

One big advantage of offshore merchant accounts for CBD merchants is the high level of discretion that it provides.

Enjoying ties with numerous stable and secure banking partners, IBS offers customized offshore merchant account solutions for CBD e-commerce merchants at competitive rates.