Every time a customer uses a credit card to pay for a product or service online, a protocol called online payment processing is initiated. This protocol is one of the requirements of running a successful business in the digital age. If you can’t accept money online, you’ll likely go bankrupt.
Online payment processing is complex and includes at least three parties, usually more.
As part of this process, every business that wants to sell its products and services online must have a merchant account. This is where buyers’ money is transferred upon payment.
Depending on the type of business in question, there are many different merchant account types. If, for any reason, your business transactions come with a certain risk of fraud or chargeback, your merchant account will probably be marked high-risk and treated differently.
What Is a High-Risk Merchant Account?
Businesses with high-risk merchant accounts need the best high risk merchant account providers usa because no other provider will be interested in handling their transactions. Being labeled high-risk has certain challenges, but they could be overcome quickly.
But, what does it mean to be marked as a high-risk business in the first place?
During online transactions, high-risk businesses have a higher chance of losing money. In most cases, this is due to fraud and chargebacks, both common in certain industries.
For example, if your business sells vape pens or CBD products, you’ll undoubtedly be marked high-risk. The same goes for providers of gambling services or online dating companies. In these industries, customer dissatisfaction is unusually high, resulting in chargebacks.
Do you Need a High-Risk Account Provider?
Some other examples of high-risk businesses include providers of subscription-based services, where chargebacks are also common. They, too, need a high-risk merchant account.
Can you be labeled high-risk even if you don’t fall under these categories?
Unfortunately, yes. The type of industry you belong to is not the only risk indicator. Businesses that process vast amounts of transactions have a higher statistical probability of losing money, too, just the same as many startups and companies that accept international payments.
Any of these characteristics would likely qualify you for the high-risk merchant account. This means that you’ll need an account provider that specializes in high-risk businesses.
Is It Safe Being Labeled High-Risk in the USA?
Being marked high-risk is not ideal, but it’s certainly not so unusual these days. Even though they pay higher processing and chargeback fees, high-risk businesses are just as competitive and successful as their low-risk rivals. They also have more rigorous cash reserve requirements.
Even so, being marked high-risk in the USA should be completely safe.
What’s crucial is that you’re completely honest about it.
Since most providers of merchant accounts don’t want anything to do with high-risk businesses, there are now specialized providers of high-risk accounts that can help you achieve your goal regardless of your high-risk status. Their experience with risky transactions is unmatched.
If you’re confident in your experience running a high-risk business, then there’s no reason why you shouldn’t proceed with opening a high-risk merchant account in the USA.
How to Prepare for the Application Process
When you apply for a high-risk merchant account, be ready to disclose as much information as possible. The provider will need to be reassured that your credit score is stable, so prepare for a cash level review. Also, compile your bank statements and other application documents beforehand.
It might be a good idea to start working on your chargebacks as well.
With most high-risk merchant account providers, the application process is long and tedious. Take that time to address your customers and see if you can do anything to fix your chargeback rate. Any advance in this matter will translate to lower transaction fees.
And don’t forget to research your provider options in the first place.
Even though high-risk merchant account providers are growing in popularity in the USA, only a handful of genuinely reliable options exist. Do your research and pick the best one.
Successful entrepreneurs often stress the importance of risk-taking in business, and they are often right. Without risk, there are no opportunities and, ultimately, no reward.
The same principle applies to running a business with a high-risk merchant account.
In the USA, being labeled high-risk is luckily safer than in many other markets across the globe. The only thing you need to do is get organized around this reality. Most importantly, this includes working on fixing your chargeback rate and choosing the best account provider.