Do you have a history of chargebacks or returns? Are you dealing with a bad credit score? Or does your chosen industry have a reputation for being high-risk?
Answering ‘yes’ to any of these questions pretty much ensures that you will have a very difficult time getting your business approved for a high-risk merchant account. Never mind finding a merchant processor that will give you fair rates and reasonable terms.
But fret not. A difficult approval procedure and higher rates are unavoidable, yes, but they’re a normal, expected part of the process. Something that merchant processors and banks have established in order to secure their own interests and financial safety.
And so, by understanding this process and opening your eyes to the available opportunities, you should be able to get approved for a high-risk merchant account in no time:
High-Risk vs. Low-Risk Merchant Accounts
To begin the process of broadening your understanding of the high-risk merchant account approval process, let’s first compare the difference between high-risk and low-risk merchant accounts by listing the criteria that decide which merchants belong in the two categorizations:
Low-Risk Merchants
Before we proceed, it’s important to note that not all merchant processors follow the same set of guidelines for identifying low-risk merchants. However, certain characteristics are indicative of merchants who may pass smoothly through their initial evaluation:
- Low processing volumes (i.e., less than $20,000 worth of transactions per month)
- Low-ticket transactions (i.e., average credit card transactions are less than $500)
- The reputation of the industry is considered low risk.
- No—or otherwise very little—history of chargebacks.
- A minimal ratio for returns
- Location of operation is considered low risk (i.e., the US, European Union, Japan, Canada, Australia, etc.)
High-Risk Merchants
Again, classifications may differ based on the merchant processor’s own guidelines. But there are general characteristics that mark merchants who may have a more difficult time getting approved for a merchant account:
- High processing volumes (i.e., over $20,000 worth of transactions per month)
- High-ticket transactions (i.e., average credit card transactions are more than $500)
- Industry reputation shows a history of high risks.
- Selling goods or services to countries known for higher risk of fraud
- History of chargebacks (i.e., chargeback ratio over 0.9% of your total transactions)
- Poor credit history
How to Get Approved for a High-Risk Merchant Account?
The first step in getting approved for a high-risk merchant account is making the proper preparations and finding a reliable merchant processor that will be able to serve your needs. The application process, in and of itself, however, is a lot simpler in comparison.
For example, if you choose Platinum Payment Systems (PlatPay) as your payment partner, you can apply for their services directly online.
They offer a free evaluation wherein you will be consulted about the best solutions and technology that your particular business requires to process credit card transactions. Approval time will vary based on underwriting and the information that you provide within your application, but the average approval processing time for PlatPay is 24-48 hours.
Increase Your Chances of Getting Approved
Understand the Underwriting Process
The underwriting process can be incredibly confusing for first-time applicants — which makes it all the more important for you to pick a merchant processor that will enable you to navigate through this process more smoothly.
It will be a rather lengthy process and will require a lot of pre-planning on your part. So, make sure that you freshen up your knowledge on underwriting before even applying.
Set-Up Business Reserves
As a high-risk merchant, reserves are a must, even if they do increase processing charges. They’re there, after all, to satisfy your payment processors and ensure that there are always funds available to cover the cost of chargebacks or refunds that are an expected part of high-risk transactions.
Recognize and Maneuver Around Chargebacks and Frauds
As a high-risk merchant, chargeback fraud is an expected part of your everyday business. However, that doesn’t mean that you should just ignore them. Instead, you must understand and learn how to navigate around chargeback fraud to maintain a good reputation and, perhaps, even cut back on some of the costs that come with being a high-risk business.
What to Consider When Looking for a High-Risk Merchant Account Provider? | Platinum Payment Systems
It being more difficult to find high-risk merchant account providers doesn’t mean that you should skimp on quality. It’s important, after all, to choose a partner that would be able to support you to become the best. For this, there are certain key criteria to keep in mind:
- Responsive Support: When it comes to processors, responsiveness is the first thing that you should look out for. And beyond this, you need a partner that has the experience required to understand the unique needs of your business’s transactions.
- Technological Support: With the quickly evolving payments landscape, you’ll also need to make sure that your processor is capable of keeping up with the demands and the expectation of today’s consumers.
- Competitive Rates: Make sure that you find a solid processor with competitive rates.
If you have yet to find a payment processor that fits the bill, you might want to consider Platinum Payment Systems, led by CEO Jed Morley.
Platinum Payment Systems is a high-risk merchant account provider that, according to Frank Kern, a well-known internet marketing consultant (and someone whose business definitely falls into the category of “high-risk” on multiple accounts), is: “Very responsive… PlatPay is… just there. It’s almost like they are a part of your business. In partnership with you. As opposed to some nameless, faceless entity that you have to appease at all times like basically every other payment processing solution out there.”
