Why is my business considered “high risk” for credit card processing?
Many businesses and industries are high risk for credit card processing for a variety of reasons. This can be surprising for many merchants who would not consider themselves “high risk”. One reason is bad or no credit, a business type that is prone to chargebacks fraud, or sell legally questionable services or products. Banks are often wary of providing credit card processing services to businesses that could pose a risk to its own reputation and deem such businesses as high risk merchants. Your personal credit matters because merchant accounts are a form of credit in that the merchant is paid by the bank before they collect any actual money from the customer. Credit history is one way to determine the risk of doing business with a potential merchant.
Electronic payment processors keep close tabs on a merchant’s charge backs. A charge back is a disputed credit/debit card sales transaction. As a result, the sales transaction is reversed and funds are withdrawn from your merchant account and sent back to the customer’s account. Excessive charge backs can cause higher processing rates for the merchant, label your business as high risk and even cause the loss of the merchant account.
If you have been turned down for a merchant account before, don’t fret. There are merchant service providers who work with high risk merchants to get them the credit card processing they need. The rates are usually higher as the processor is assuming more risk but there are options. Frontline Processing offers a variety of electronic payment solutions for all business types, including high risk merchant service needs.
Some examples of high risk merchant accounts are:
Bail Bonds Services
Match Making Services
Home Based Companies