“Termination” is a scary word. It signifies an end, and it generally has a negative connotation. High risk merchant account termination happens when merchants who operate in tricky industries get caught up in too many chargebacks or experience other business hiccups that cause their merchant account provider to terminate their account.
Let’s look at some of the facts surrounding high risk businesses. Understanding the ins and outs of this complex ecosystem can help merchants avoid high risk merchant account termination.
Facts About High Risk Merchants
The term “high risk” gets thrown around a lot in payment processing, however, there are some facts that can provide clarity on what this label truly means. Understanding these things can help merchants create a roadmap to ensure the business remains in good standing and can help them avoid high risk merchant account termination.
Fact: If a merchant falls into one of the following categories/industries, they are likely labeled “high risk” by traditional banks and merchant account providers:
Fact: One labeled high risk, merchants may have a difficult time getting a merchant account, and will probably face higher processing fees than other low risk merchants.
Fact: If a merchant operates in a volatile industry that is subject to volume spikes and increased chargebacks, they are at a higher risk of termination.
Fact: Traditionally low risk merchants can become high risk merchants if they are terminated and added to the Terminated Merchant File (TMF).
Facts About High Risk Merchant Termination
The paths to termination are many and complicated. As illustrated above, even low risk merchants can become high risk merchants if the perfect storm of unfortunate events occurs. Perhaps the scariest termination scenario is high risk merchant account termination.
For merchants already working with a high risk specialist, merchant account termination may seem like the final destination. It doesn’t have to be. Merchants will need to do some digging to understand their cause for termination as well as what they could have done better to prevent it.
High risk merchants that have been terminated by a payment services provider should understand that they will face increased scrutiny, no matter what. Merchants are labeled as high risk because they present a risky proposition to the merchant banks and acquirers that take them on. An online shop that faces a high number of chargebacks and then suddenly goes out of business leaves banks on the hook. It makes sense that they remain leery of those that have been terminated in the past. However, it doesn’t have to be the final destination for high risk merchants with legitimate businesses who want to run a successful online business.
Finding the Right Specialized Payment Processor
The truth is that traditional merchant account providers and bank underwriters don’t understand the complex business models executed by merchants that fall into the high risk category. Even those that claim to be high risk processors are often lacking the expertise to help these merchants thrive and grow in their industry.
Finding a specialized payment processor after high risk merchant account termination can salvage an online business and even bring it back to life. Specialists often offer lower transaction fees, do not require rolling reserves, do not impose volume caps, and can provide end-to-end chargeback management to keep fraud in check.
Major benefits arise from access to a secure payments processing account at domestic rates. A specialized high-risk payment processor can work with merchants to make that possibility a reality for the business.
Facts About the Best High Risk Payment Processors
In choosing the best high risk provider for a business, consider the following facts:
Fact: Plenty of companies offer “high risk payment processing solutions”, but only a fraction of those possess the deep expertise to help a company not just survive, but thrive.
Fact: Not all high risk payment processors are reputable. Look for a partner that offers a secure, reputable, and stable solution. This should include a PCI compliant gateway for secure transaction processing and a suite of customized fraud prevention tools that can be tailored to the business.
Fact: Fair rates are available, even for merchants who have gone through high risk merchant account termination. Review proposed contract terms and ensure that all fees and stipulations are disclosed up front. Avoid providers that charge application or set up fees.
MerchACT has comprehensive industry experience with high risk businesses across a variety of industries. Our track record illustrates our ability to provide stable, reliable merchant accounts as well as excellent customer service and consulting across all payments issues.