eCommerce merchants cannot function without taking credit or debit cards. However, it would help to first acquire a payment processor like Tailored Pay to accept electronic payments. This is an intermediary between you, banks, and credit card networks.
Numerous processors choose to work primarily with merchants they perceive as “safe” or “low-risk” ventures. Businesses classified as “high risk” will have a limited number of possible processors.
We’ll explore the ins and outs of high-risk merchant accounts and processing in this post. We’ll look at the additional expenses and hurdles that high-risk businesses face, as well as why they may pay extra for payment processing. Finally, we’ll discuss various service providers that can assist people in high-risk industries.
Basic Information about Accounts Considered as High-Risk
A high-risk merchant account is a subgroup of services that enable firms operating in high-risk industries to accept consumer credit card payments. These accounts often have stricter rules and conditions than regular merchant accounts and are thus more expensive to operate.
Assume you wish to register a new merchant account for your business to accept credit card payments, then any payment processor that you contact will conduct a thorough, in-depth analysis of your organization to see whether you meet their definition of “high risk.”
Processors categorize merchants as either high risk or low (average) risk depending on various characteristics. Ultimately, this assessment is based on your business’s financial risk to the institution. More precisely, your susceptibility to fraud and chargebacks.
High-risk merchants have fewer processor options. Additionally, they will be required to pay more outstanding fees to compensate for the perceived risk, as well as deal with more demanding contracts.
At first, look, being designated “high-risk” does seem unpleasant. However, it may be your best (or only) alternative in some circumstances.
What Constitutes a High-Risk Business?
Being classified as a ‘high-risk’ merchant does not imply that your firm is more untrustworthy than your competitors; this classification indicates that processors are seeing an increase in the number of conflicts in your vertical. Risk is calculated based on the number of chargebacks a processor may anticipate processing each month. It is not indicative of your business’s viability.
Which Industry Sectors Are Considered “High Risk?”
While this is hardly the end of the world, being a high-risk trader certainly has its pitfalls. Numerous genuine businesses obtain the designation from payment processors based on the merchandise volume they sell each month. Perhaps the most frequent reason merchants are classified as “high risk” is because of their merchant category code, or MCC.
Specific industries have historically been more prone to chargebacks, and as a result, MCCs associated with those verticals are generally regarded as high risk.
Providers of High-Risk Merchant Accounts
Numerous conventional processors may reject a firm that generates a high volume of chargebacks. As a result, it may be required to occasionally seek out high-risk merchant services. However, where do you begin?
You want to work with trusted processors who specialize in providing high-risk merchant solutions. However, thoroughly read the fine print for terms, conditions, and costs before selecting a payment processor. Each platform is unique. One may provide alternatives that are more suitable to your business than those offered by a competitor.
Tailored Pay
TailoredPay is a leader in high-risk card processing for a variety of businesses. We offer a simplified solution for firms that are difficult to place due to our vast worldwide network of processing and banking partners.
Verotel
Verotel is a merchant account provider that specializes in high-risk and international enterprises. As is the case with other high-risk merchant accounts, you will pay a more significant transaction fee, with Verotel charging up to 15.5 percent for each credit card purchase. The good news is that there are relatively few additional costs if you qualify for a premium account, and transaction fees can also be significantly lower – mainly if you accept frequent payments from your clients.
Bitpay
Bitpay is a merchant account service that specializes in Bitcoin and Bitcoin cash payments and the ability to convert Bitcoins for US Dollars. While bitcoin payments are not yet widespread, they have a history with high-risk merchants, and Bitpay is attempting to boost its market share in this growing industry.
Each transaction is subject to a flat 1% settlement fee, much less than the standard rate for card payments in fiat currencies. Dealing with Bitcoin also eliminates chargeback costs and enables you to sell to anyone who accepts Bitcoin.
Epoch
Epoch Payment Solutions is a leading merchant accounts provider to high-risk and multinational enterprises. It offers to assist you in growing your client base by ensuring safe payments, adaptable services, and transparent pricing. Similar to Verotel, you’ll pay up to 15% per transaction, based on your typical weekly volume, a $1 processing fee, and $12.50 for chargebacks.
While Epoch generally offers a competitive package as a supplier of high-risk merchant accounts, there are an alarming amount of complaints regarding the firm billing consumers for services they either did not sign up for or were unaware they signed up for.
Instabill
Instabill is a specialist in high-risk merchant accounts, and even the riskiest projects may often get an account with this UK company. As is customary for high-risk businesses, you will pay a premium. Still, there are no cheap lunches in this game, and you must be especially cautious of high-risk merchant suppliers that promise meager rates. With around 12,000 active accounts, Instabill is not the most extensive service, but it has a solid reputation for welcoming new merchants and caring about them.
GSPAY
GSPAY is a relatively known provider of high-risk merchant accounts that offers a range of fixed rates for various businesses. For example, eCommerce firms may anticipate paying 4% on each transaction, whereas dating sites will pay 6%, and IT support will pay 10%. Pricing looks pretty straightforward and well-documented on the company’s website — a rarity in this industry.
It’s challenging to have confidence in the look and content of GSPAY’s website. Similarly, it’s tough to unearth much information about this business regarding client feedback from prior or current customers. This makes us cautious about endorsing GSPAY, even if they may be operating quietly and concentrating their attention on merchant accounts rather than decorative web design.
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