Administering High-Risk Credit Card Processing and Merchant Accounts
The rising popularity of digital payment methods drives many businesses to search for efficient electronic payment processing systems. However, not all retailers get the necessary services, especially those working in high-risk areas where fraud and chargebacks are common.
Deciding whether the business is high-risk or not requires many aspects and analyses. Unlike centralized authority, banks and payment processors abide by their own rules. Therefore, some industries may be rejected by some, while others may scrutinize each business individually.
A high-risk merchant account is necessary for businesses prone to high rates of chargebacks or fraud. This particular account allows them to carry out debit and credit card transactions even when they have a higher risk status than other businesses. Industries often termed as high-risk comprise CBD, e-cigarettes, credit repair, MLM, adult products, and the technological advancement industry.
Whether a merchant is high-risk depends on the payment processing company’s risk management practices. Businesses should acknowledge the importance of getting the right payment processing partner suitable for their business necessities.
Patel Processing: Handling High-Risk Merchant Accounts
In the case of processing payments, numerous factors contribute to designating a business as “high-risk.” Patel Processing recognizes these diverse considerations:
In the case of processing payments, numerous factors contribute to designating a business as “high-risk.” Patel Processing recognizes these diverse considerations:
New Entrants:
Industries can be classified as the high-risk category when the history of payment processing is missing.
Industries can be classified as the high-risk category when the history of payment processing is missing.
Credit Records:
If the customers have a bad credit history or low credit ratings due to loan defaults, it increases the risk factor associated with a business.
If the customers have a bad credit history or low credit ratings due to loan defaults, it increases the risk factor associated with a business.
Match List:
Being included in a processor’s match list resulting from past failures can make businesses more vulnerable to other problems.
Being included in a processor’s match list resulting from past failures can make businesses more vulnerable to other problems.
Controversial Operations:
Companies selling controversial or illegal products undergo higher risk assessments.
Companies selling controversial or illegal products undergo higher risk assessments.
International Dependency:
Companies dealing in international sales as their fundamental source of revenue incur more risks, especially during the era of widespread turbulence in global economic dynamics.
Companies dealing in international sales as their fundamental source of revenue incur more risks, especially during the era of widespread turbulence in global economic dynamics.
Regulatory Environment:
These industries are at high risk since the government and legislative bodies often subject them to stringent laws or regulations.
These industries are at high risk since the government and legislative bodies often subject them to stringent laws or regulations.
Distinguishing High-Risk Accounts in Payment Processing:
The prospect of being labeled a high-risk business can be daunting, yet Patel Processing outlines the notable differences between High-Risk Merchant Accounts and regular merchant accounts:
Thorough Application Process:
Submitting a high-risk merchant account application includes giving out a lengthy report to your provider for risk assessment. The report consists of not only financial histories but also processing patterns.
Submitting a high-risk merchant account application includes giving out a lengthy report to your provider for risk assessment. The report consists of not only financial histories but also processing patterns.
Elevated Processing Fees:
Compared to a regular business, a high-risk merchant account is at a greater risk and charged up to 1.5% plus interchange fees. These charges are a deducted payment that reflects the higher risk associated with such an account.
Compared to a regular business, a high-risk merchant account is at a greater risk and charged up to 1.5% plus interchange fees. These charges are a deducted payment that reflects the higher risk associated with such an account.
Patel Processing is aware of the precise influences of high-risk transactions and specializes in providing customized solutions that allow both the rejection/acceptance of account risk and a smooth payment process.
Cash Reserve Management
In particular, Patel Processing recognizes that installing a secure financial basis is very important for businesses. They may maintain the thresholds
In particular, Patel Processing recognizes that installing a secure financial basis is very important for businesses. They may maintain the thresholds
of this reserve in several ways:
Rolling Reserve:
We will set aside a portion of each transaction to create a cyclical reserve. Each business category requires a different amount as a reserve, especially for high-risk companies where a reserve of 10% is not unusual. To clarify, under the 6-month rolling arrangement, revenue will be processed next year in July.
We will set aside a portion of each transaction to create a cyclical reserve. Each business category requires a different amount as a reserve, especially for high-risk companies where a reserve of 10% is not unusual. To clarify, under the 6-month rolling arrangement, revenue will be processed next year in July.
Capped Reserve:
The ability of our business option to stabilize a fixed amount of cash is called capped reserve. We hold a portion of each transaction until reaching a set reserve level. Once the target fund has reached a set level, transfers stop, but the reserve fund remains active.
The ability of our business option to stabilize a fixed amount of cash is called capped reserve. We hold a portion of each transaction until reaching a set reserve level. Once the target fund has reached a set level, transfers stop, but the reserve fund remains active.
Upfront Reserve:
For high-risk clients, we offer an advance reserve arrangement, which means collecting an upfront reserve in advance from a merchant account holder. Sometimes, we might hold client transactions for NTF (non-fungible token) price before which we tend to afford.
For high-risk clients, we offer an advance reserve arrangement, which means collecting an upfront reserve in advance from a merchant account holder. Sometimes, we might hold client transactions for NTF (non-fungible token) price before which we tend to afford.
Elevated Chargeback Fees
Reimbursements are essential elements of business, and accompanied chargeback fees are also frequent. Patel Processings understands the chargeback trail, especially where companies have a high chargeback ratio. A reality check on the pitfalls of chargebacks may guide our fee structure and include the addition of an extra surcharge for denied chargebacks. Companies like clothing hypermarkets, whose charges withdrawn transform to rise, may find our fee modal especially useful.
Reimbursements are essential elements of business, and accompanied chargeback fees are also frequent. Patel Processings understands the chargeback trail, especially where companies have a high chargeback ratio. A reality check on the pitfalls of chargebacks may guide our fee structure and include the addition of an extra surcharge for denied chargebacks. Companies like clothing hypermarkets, whose charges withdrawn transform to rise, may find our fee modal especially useful.
Volume caps in credit card processing
Some credit card processors may prohibit further transactions if sales volume exceeds a limit. They presume high volumes increase risk. In cases where sales volume exceeds the pre-set level, we may temporarily prevent access to orders and advise customers to wait patiently.
Some credit card processors may prohibit further transactions if sales volume exceeds a limit. They presume high volumes increase risk. In cases where sales volume exceeds the pre-set level, we may temporarily prevent access to orders and advise customers to wait patiently.
Additional Compliance Requirements
Patel Processing has specific additional requirements for their services based on the type of business. It is to ensure that they maintain high regulatory compliance to minimize risks. If you own a high-risk business, you should know the various aspects of payment processing.
Patel Processing has specific additional requirements for their services based on the type of business. It is to ensure that they maintain high regulatory compliance to minimize risks. If you own a high-risk business, you should know the various aspects of payment processing.
Once you receive the high-risk categories for your business, choosing the best high-risk merchant account service providers will become a bit difficult.
Here are some key considerations to help streamline your search:
Maintain Adequate Cash Reserves:
Showing good records of cash flows in your business bank account is a principal factor in establishing a good reputation for your business with payment processors. It suggests that a company is economically stable, which in turn would reduce the risk level.
Mitigate Chargebacks:
Focus on understanding why there are chargebacks in your business and enact measures to address the issue. Be it the differences in product description and what is received in e-commerce or extended time frames for shipments, take steps to reduce the likelihood of chargebacks. Analyze the trends and implement measures to decrease the majority of incidences.
Focus on understanding why there are chargebacks in your business and enact measures to address the issue. Be it the differences in product description and what is received in e-commerce or extended time frames for shipments, take steps to reduce the likelihood of chargebacks. Analyze the trends and implement measures to decrease the majority of incidences.
Transparency is Key:
While applying, present all the financial information about your business operations in detail. Not revealing important facts can easily lead to your reputation being at stake, and it might even cause you to reject the application. High-Risk Merchant Accounts are typically subject to strict screening processes that prioritize transparency.
While applying, present all the financial information about your business operations in detail. Not revealing important facts can easily lead to your reputation being at stake, and it might even cause you to reject the application. High-Risk Merchant Accounts are typically subject to strict screening processes that prioritize transparency.
Prepare Necessary Documentation:
Among the necessary documents are six months of bank statements, several years of tax returns, and so on. Each payment processor has possibly different documentation requests, so be sure to know them and meet them beforehand.
Among the necessary documents are six months of bank statements, several years of tax returns, and so on. Each payment processor has possibly different documentation requests, so be sure to know them and meet them beforehand.
Adhere to Processor Guidelines:
Acknowledge the payment gateways to consider your high-risk account should take into account not only your business needs but also their risk tolerance. You should be prepared for the discussions and welcome their counsel for risk mitigation. Following their framework reduces the probability of rejection or discontinuation of your participation.
By following these rules and communicating with potential payment processors, high-risk businesses can negotiate with the payment processing space efficiently and find solutions that can satisfy them.
Acknowledge the payment gateways to consider your high-risk account should take into account not only your business needs but also their risk tolerance. You should be prepared for the discussions and welcome their counsel for risk mitigation. Following their framework reduces the probability of rejection or discontinuation of your participation.
By following these rules and communicating with potential payment processors, high-risk businesses can negotiate with the payment processing space efficiently and find solutions that can satisfy them.
How to Choose a High-Risk Merchant Services Provider- A Tough Choice
As the owner of a high-risk business, it can be challenging to find standard pricing for a high-risk merchant account on a provider’s website or other public domains. Commonly, you may need to schedule a private consultation with their representatives to present your case and ensure that you get the best deal. To search for the best high-risk Payment Processors for your business, you should look for a list of providers tailored to your industry. Once you have a few options, take the time to consider what each provider offers and how they can benefit your company.
It’s important to seek clarification on important aspects, such as:
Their experience working with businesses operating within your field.
Processing time of payments.
This matter is whether banks are required to set aside a certain proportion of their deposits.
EChecks and ACH payment options support credit/debit card support.
Break-up fees should be early in case of switching to other providers.
Types of equipment supplied, like POS machines and virtual terminals.
The accessibility and reliability of their customer support teams.
Is Patel Processing an Independent Agent of High-Risk Businesses?
High-risk merchants often have limited options when choosing a service provider. Patel Processing is proud to be among those options. We are always happy to work with high-risk businesses who are interested in exploring the solutions we offer. At our processing company, we have a unique advantage — our advanced pre-approval methodology before setting up your merchant account. It allows us to identify potential risks at the initial stages, saving you time and money. If we are unable to fulfill your orders, we will inform you immediately. We may also suggest alternative processors for your order.
It is important to note that not all payment processors using the same methods can identify risks early. Retailers who are not familiar with the existence of such a policy may lead to undesirable complications.
Conclusion
The argument above shows obvious business risks related to specific businesses. Risk categorization is only relative and can be different between merchants and processors. Nevertheless, these payment servers provide easy entry where the merchant may face unexpected termination of service.
