For a small business owner, it can often be a challenge to get a merchant account when their business is considered high risk within the credit card industry. You may have faced the problem yourself as a business owner. Even when you do finally find a company able to offer you a high risk merchant account, the level of documentation they require and the stipulations your business must meet will likely make the process unfeasible. Fortunately, there is hope. In this post, we’ll examine why you might not be able to get a high risk merchant account and what you can do to gain account access.

 

High Risk Accounts Pose Challenge to the Institution

Companies within industries such as tobacco sales, outbound telemarketing, gaming, and pharmaceuticals are usually always considered “high risk” within the financial industry. These industries tend to have a few elements in common, which then lead to their high risk status. Such elements include the following:

  • A tough regulatory environmentWithin an industry such as pharmaceuticals, it can be challenging to get a new product approved by the relevant agencies. This can stall company progress and in turn make the firm a high risk to credit card processing companies.
  • Potential for fraudHigh risk industries also carry a higher potential for fraud. For example, within the outbound telemarketing industry there is an increased incentive for the company to misrepresent their product, potentially leading to fraud changes.
  • Higher likelihood of chargebacksAnother reason credit card processors are likely to deem a business “high risk” is that the company may have a higher likelihood of chargebacks. For example, companies within the nutraceuticals industry may find customers don’t order more of their product after a trial offer, necessitating chargebacks on their account.

Owners can Support Processors with Improved Documentation

Each processor is seeking out one particular item from a high risk company using their services: proven data. The more the company owner can do to show the processor their firm is a limited risk, the better the chances of their application being successful. Business owners can complete the following actions to showcase their limited risk status:

  • Comply with all documentation requestsThe processor is in a position of power. They require precise information from the business to ensure they are making the right choice to provide their credit card services. Business owners should comply with all reasonable documentation requests in a timely manner.
  • Showcase Tangible DataWithin their documentation, business owners should highlight tangible data such as monthly sales volume, average transaction amount, and chargeback ratios. This will help prove the business has the fundamentals to succeed over the long-term.
  • Maintain contact with the processorIt’s important to maintain professional contact with the processor throughout the application process. This will help the processor see the business owner’s willingness to work with them and ensure that any potential risks can be reviewed and mitigated as the application is completed.

High risk merchant accounts are difficult to acquire for growing businesses. But by following the guidance within the industry and working carefully with their processor, companies can succeed in this challenging process. To learn more, call our team today.

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