“High-Risk” Businesses and Credit Card Processing

A point-of-sale terminal.

Many successful and vital businesses are told they are in a “high-risk category” when they apply for banking services and credit card processing. If you are involved in a startup or even have an established business and a good credit history, you may find you have trouble finding high-risk business credit card processing at a reasonable rate.

What makes a business high risk, is there any way to change this status, and what does this mean for your business future? Let’s discuss high-risk companies and how to lower those account fees and payment processing rates.

What Are High-Risk Merchant Services?

Running a business which is considered high risk by the banking industry is no reflection on your likelihood to succeed financially. This designation is based on how likely it is that you might have chargebacks or refunds on your processed payments.

Certain industries have a high potential for chargebacks. Especially if you operate an online store, you may fall into the category of high-risk businesses. This usually means you will pay higher rates and may have to shop around for a credit card processor who will work with you to find the best possible solution for your budget.

What Makes a Business High Risk for Credit Card Processing?

The criteria used will vary from bank to bank or processor to processor, but there are some factors that are commonly considered when designating a business as high risk:

  • Selling products of questionable legality or which are legal in some states but not others
  • A processing history with a high customer chargeback rate or fraudulent payment reversals
  • Operating an offshore business in the United States
  • Selling high-value items on credit card payment like boats, cars, land, or trips
  • Having a poor personal credit score as the business owner
  • Operating a business within a high-risk industry

Types of Businesses That Are Considered High Risk

While there is some variation between processors, these types of businesses are usually considered a risk for credit card processing because they have a history of generating frequent chargebacks:

  • Phone based services, social media, video, and chat sites
  • Products or services considered to be adult in nature
  • Selling trips, airplane charters, events, vacations, and tour packages
  • Operating a store on Google, Yahoo, Amazon, or with any major hosting service
  • Services or products sold by membership, annual contract, or recurring payments
  • Check cashing, credit repair, or debt collection services
  • Extended warranty companies, coupons, points, and discount or rewards programs
  • Casinos, online gaming, and gambling, including fantasy football
  • Financial brokers, planners, or investment advisors
  • Federal Firearms License dealers, or any dealer in firearms, ammunition, or self-defense products
  • Life coaches, hypnotists, psychics, or horoscope readers
  • International merchants, importers, exporters, and international shipping or cargo
  • Health and wellness businesses, vitamins, supplements, and services
  • Nightclubs, bars, taverns, and pawnshops
  • Web development and technical customer support services

How Much Will High-Risk Payment Processing Cost?

If your business falls into one of these high risk categories, you should expect to pay higher rates for processing. Before you enter into a payment processing agreement, you should review your options carefully. Many of these contracts include an early termination fee.

There are payment processing companies that will target you if you fall into this category, and they will attempt to lock you into long-term contracts that include large rolling reserves and chargeback rates. They will charge you a much higher rate for every transaction as well, costing your business more than necessary for this essential service.

Starting your search with a reputable credit card payment company like Adept Payments is one way to make sure that you are not paying more than necessary for your payment gateways and point of sale equipment. Being a high-risk merchant does not mean you have to settle for second-class customer service and high rates.

Can You Change Your High-Risk Pay Status?

Banks and payment processors have strict standards, but it is sometimes possible to reduce your risk factors to obtain the regular processing status. Some of these factors that might be in your control include:

  • Maintaining a chargeback rate that is less than 1%
  • Improving your personal or business credit score
  • Increasing your cash flow to more than $20,000 in monthly sales

How to Apply for a High-Risk Merchant Account

Working with a reputable payment processor is key to finding the best rates and package solutions for your business. Remember that you have many options and are not limited to companies that market to high-risk accounts.

As you choose the best payment processor for a high-risk business, consider these tips:

  • Evaluate their website and online presence. A dated or poorly constructed website is often a sign of an unreliable provider. If their only focus seems to be high-risk accounts, you are unlikely to get the best possible rates or a flexible contract. Check the website for testimonials and look for reputable companies that utilize their services.
  • Read reviews and consider their reputation in the industry. Check online reviews and the Better Business Bureau to make sure the company you deal with is well-regarded by users and has no complaints about fraud or data breaches in their recent history. A company with integrity and a high level of business customer satisfaction should be at the top of your list. Most large companies have some disgruntled users, but their response to these complaints will tell you how they worked to resolve these.
  • Read the fine print on the application materials and proposed contract. Review all available materials carefully, including the terms and conditions of service and the merchant application itself. If a sample contract is available, this can be helpful, but be sure to carefully review the contract offered to you to make sure there are no hidden fees or costs associated with the service or terms that can change dramatically if your chargeback rate increases.

Finding the Guaranteed Lowest Rate for Your Business Credit Card Processing

Adept Payments provides the same high-quality service to low- and high-risk merchant accounts. Our team is on your side, always looking for the most cost-effective solutions for your business. When you work with our experts you will find:

  • The guaranteed lowest rate available. If at any time another company offers you a better rate, send it to us in writing, and we will match it.
  • We have a 50/50 program where we work to reduce the rate you are paying now by 50%.
  • We have no contracts or early termination fees because we earn the loyalty of our customers with the best service and rates available.
  • There are no hidden fees or costs. We provide a clear and honest pricing schedule you can use to keep your payment processing budget under control.
  • Fast approvals happen within hours of your complete application. Our underwriters and support team will process your application efficiently and work with you to make sure you choose the best plan to match your needs, at the best possible price.

Contact us today or apply online to find out how Adept Payments can provide the best rates with the flexibility and top-notch customer service your business deserves.

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