How to Choose the Best High Risk Credit Card Processing

When a business which is prone to higher risk of chargebacks is called a high risk merchant. To be able to keep accepting credit cards for transactions and maintaining a streamlined business process, one is advised to have a reputable high risk card payment processor. Let us first understand the difference between the low risk and high risk merchants.

What is a Low Risk Merchant?

General indicators:

  • Less than $20,000 processed monthly
  • Average credit card transaction is less than $500
  • The industry that a merchant operates in is considered low risk (these are, for instance, low risk clothes and shoes, household goods, baby products)
  • Zero to low chargeback ratio
  • The country a business operates in is considered low risk (European Union countries, USA, Canada, Australia, Japan)
  • Minimized returns

What is a High Risk Merchant?

General indicators:

  • More than $20,000 monthly sales volume
  • Average credit card transaction higher than $500
  • A business sells products and services to countries known for high levels of fraud
  • Bad credit history and excessive chargebacks

Examples of High Risk Merchants

  • Online gaming
  • Travel, booking, and tickets
  • Dating
  • Adult content
  • Regulated Forex
  • Regulated online casinos
  • EU licensed investments & money transfers

Features of a reliable High Risk credit card processor

1. Customised Solutions: For any high risk merchant, the merchant services provider must be aware of the needs of the retailer. It becomes more viable for a business to be transparent with operations and the online sales process. The credit card processor must provide a hand-tailored solution and provide a reliable credit card processing. There are certain costs that accompany like – Set-up Fee, Monthly Minimum Fee, Cancellation Fee, Chargeback Fee, and Gateway Fee.

2. Security: A 3-D secured payment gateway is considered to be the best way to protect each financial transaction. Safety of the funds and financial health is paramount and it should be a major parameter to factor in while choosing a high risk merchant account service. Consultation should be done before choosing the provider and one must look out for a top-of-the-line security and a proven track record of keeping business and customer information safe and secure.

3. Other features are as follows:

a. Synchronised business models of the payment processor
b. Expertise of the company and clientele reviews
c. Flexibility in implementing different payment scenarios as per the needs
d. Pricing and fees must be discussed prior to association with the payment processor
e. Integration with other elements of business operations through versatile APIs
f. Swift customer service makes sure that any issue faced by the merchant is resolved quickly and prevents any harm to customer experience or brand reputation

How to apply for High Risk Merchant Account

The following paperwork is required to be collected before applying:

  • Incorporation certificate
  • Shareholders’ certificate
  • Organizational structure chart (Shareholders)
  • Copy of your passport and utility bill of local directors and shareholders holding more than 15%
  • Incorporation certificate and shareholder certificate of other firms in case of being a shareholder
  • Processing history for the last 6 months (total volume, number of transactions, chargeback percentage)
  • Test user credentials with premium access to the platform
  • The license number and name of the organization that issued the license (if you run a business that requires a license)

After that a due diligence is conducted by the risk management professionals based on the history of chargebacks, the frequency of returns, industry reputation, and credit score.

Benefits of a High Risk Merchant Account

  • Global coverage: Gives a very broad access to larger market and allows accepting payments in multiple currencies. A business can reach out to interested customers all around the world and sell easily with low risk in transactions.
  • High chargeback protection: As chargebacks laws are framed keeping the customer in mind, it is the merchant who suffers the most. Having such an account keeps the retailer sound in fiscal terms. A high risk merchant account can hedge the merchant against risks like chargeback threshold and prevent termination of the account.
  • Business expansion: Gives room to sell products / services which are usually not allowed through low risk merchant accounts and provides ample opportunities to grow in the longer term. This also improves the chances of earning more money when compared to low risk merchant accounts.