A merchant account allows businesses to process debit and credit card transactions. Without the ability to process ecommerce transactions, a business is restricted to operating in cash-only. For some merchants, securing a merchant account is next to impossible. High risk merchants do not qualify for merchant accounts with traditional processors. Traditional processors simply aren’t willing to accept liability for increased risk associated with these merchants, so they turn them away. So, what influences the categorization of merchants as either low- or high-risk?
If your e-commerce business experiences a low monthly volume ($20,000 or less in sales) and your average ticket size is $50 or less, banks will likely place you in the low-risk category. It also helps if your business is part of a low risk industry (e.g. books, home goods, apparel, etc.). Banks will also be more comfortable if your business operates in low-risk regions (U.S., Canada, Australia, European Union, among others.). Another advantage is if your business uses only one form of currency.
A variety of factors causes a processor to categorize your business as high risk. Bad personal credit history can make it incredibly difficult to secure a merchant account. If your industry is considered too risky, this will also be a red flag to banks. A high chargeback rate is the most common reason businesses are turned down. In fact, excessive chargebacks can result in a canceled merchant account, in addition to severely damaging the merchant’s reputation.
Where Can You Find High-Risk Merchant Accounts?
While banks may be unwilling to work with you, high risk processors like eMerchantBroker specialize in offering businesses like yours the solutions they need. Their high-risk merchant accounts are specifically tailored to meet your unique needs and offer safe payment processing options. Merchants can also take advantage of chargeback prevention and protection programs and business funding options.
The biggest advantage of all is the simplicity of the application process. Traditional lenders involve strict credit requirements, extensive documentation and time in business. With an alternative provider, on the other hand, the application can be completed in minutes. Rather than waiting weeks (or even months) to hear a response with a bank, alternative processors give approval in as little as 24-48 hours. Your business can also benefit from gaining an experienced staff as a support system.
If your struggling to find the merchant services you need, make sure you research your options with an alternative provider like EMB.