Do you qualify as a high-risk merchant? If you do, is it possible to get a credit card processing account? Let’s take a look at what could cause your company to be “high risk” and whether or not your business can qualify for a merchant account.
Certain products are considered high-risk such as e-cigarettes, health products and certain types of downloads. While merely selling such products does not guarantee that your business will be a high risk, it is one factor that merchant account providers look at when making the classification.
Has your company registered with the proper local, state or federal regulatory agencies? If your company has not yet done so or has applications that are still pending, your business may be labeled high risk by merchant account providers.
Small businesses are a higher risk compared to large businesses because small businesses don’t always have consistent sales, may be more susceptible to fraud and may have a harder time absorbing chargeback and refund fees. If your company has not had at least two years of steady revenue or does not make at least $10,000 a month, your account may face extra scrutiny.
If you own a business and have bad credit, you may be placed in the high-risk merchant account category, because there is a statistically greater chance that you could engage in risky activities. Such as money laundering or other types of fraud that could bring down your business and cause harm to the provider of your merchant account.
For companies that are labeled as high risk, there are high-risk merchant providers like High-Risk Pay that you can work with to begin accepting credit cards and processing online payments. While a high-risk merchant account may charge slightly higher fees to mitigate risk on their end, your company should not face any other restrictions as to what it can sell and where it can sell. Depending on the merchant account provider, fees may even be comparable to those merchants with more traditional business models.
While there is no guarantee that your business will be a higher risk just because of what your company sells or how big it is, those factors could increase the odds that you will need a high-risk merchant account. Fortunately, even high-risk businesses can obtain the merchant account they need to start accepting credit cards and growing the business.