Yamilet Strauss, owner of Merchant Processing Solutions
One of the first things merchant processing providers look for in order to approve a merchant account; is credit worthiness! The business' tax returns, bank accounts along with owners' past history and credit score. A high-risk merchant is a business that provides products or services that are subject to regulations, laws, fraud and chargebacks!
- The Risk that processors look for are one of these 5 types:
- Financial - Does this business sell high-ticket items or services that with a couple of bad sales and chargebacks could close the company?
- Example: Accepting credit cards on car purchases. If the customer finds an issue with the car, the BRANDS allow up to 180 for the customer to do a chargeback!
- Reputational - Does this company fall within the "norms" of acceptable products or services?
- Example: Airlines typically have terrible reputations for poor service. In 2021, it was reported that 25% of airline customers requested their money back, in the form of a chargeback!
- Legal - Is this company legal or fall within the gray lines of the law?
- Example: Medical and Recreational Marijuana is not legal in all states yet. Even illegal in some areas where the state approved usage but not sales! Legally selling regulated products or services is tricky and leaves the business open to constant chargebacks!
- Compliance - Is the business compliant with all the rules and regulations enforced for their business?
- Example: A company that sells vitamins that are not FDA Approved is a risk for merchant processors as if they do not "fix" or do what the customer expected it to do, they do a chargeback!
- Operational: Is your business a "custom" product or service? How much of your business is shipped? How many overseas clients do you have? What type of employees to you employ? All of these "operational" risks can make a business a "high-risk" merchant.
- Being in a high-risk industry increases the likelihood of being labeled a high-risk business. A burlesque club automatically goes into the "Adult Entertainment" category under high-risk.
- Selling high-risk products can also puts a business into the high-risk category
High-risk businesses have a much higher possibility of financial failure than traditional businesses. That is why it is very tedious to get approved for a merchant account. Merchant Processing Solutions has help many high-risk merchants get approved at REASONABLE RATES for their business. Let us help!
