High Risk Merchant Accounts | Radiant Pay Official Blog

Applying for a merchant account can be a daunting experience, especially if this is your first time in the market.

When a firm goes bankrupt or has a large number of chargebacks (the reversal of cash requested by the customer from your account back to the customer), merchant processors face financial risk and liability. It’s an obvious opportunity for fraudsters. So, before forming a partnership, banks and merchant account processors do their study.

When a company does not match the requirements for a low-risk merchant account, a high-risk option generally meets its needs. These accounts enable businesses with high chargeback rates, poor credit, or a bad reputation to accept credit and debit transactions, but getting one is far from guaranteed. If you make a few errors on your application, your business may be unable to accept your consumers’ payment options.

If your high-risk merchant account application is rejected, it could be due to one of the following issues:

Lack of appropriate documentation

Give the account provider the most accurate summary of your firm that you can when completing an application. To accomplish this, you’ll need current monthly statements that include information about your business’s monthly volume, chargebacks, and decline rates.

High Decline Rates

Customers’ banks may reject transactions when they make purchases from your business owing to incomplete information, anti-fraud regulations, and other reasons. Even while this issue may be unavoidable, if it persists long enough, it may have negative effects. Some merchant account providers could refuse to work with you if more than 10% of your transactions are refused.

You Are Enlisted On The MATCH List

Those who engage in fraud, money laundering, collusion, illegal activities, and other offences are listed on the Member Alert to Control High Risk (MATCH) list. You can find it challenging to get a merchant account for up to five years if your name or that of your company shows on the list.

Make sure the directors you choose—or even the company’s largest shareholders—have a spotless record to avoid being included on the MATCH list.

Your Company Is Linked to Fraud or Illegal Activity

The acquiring bank may reject your merchant account application if it determines that your goods or services are connected to fraud or unlawful activities. Among the instances are:

A merchant attempting to sell controlled substances.
Adult material that is prohibited, such as child pornography, excessive violence, or bestiality
Products on a website that don’t match the description or price

High Chargebacks

High-risk accounts typically give sectors that frequently deal with disputed transactions more latitude. The same is true for companies that provide services like annual memberships or automated recurring billings, which can lengthen the duration during which a business is exposed to chargebacks. However, there is still a line that some service providers won’t go beyond. The likelihood that your application will be approved will rise if you avoid making too many chargebacks.

Issues with Licences

Companies typically require a business license to approve a merchant account. In many cases, this can be as straightforward as obtaining a company license, but some internet businesses, including pharmacies and gambling websites, are subject to tougher regulations that limit where they can operate and what they are allowed to sell. You could not be eligible for a high-risk merchant account if your business is unable to acquire these requisite permits.

Tax liabilities

To open a merchant account, you must provide both personal and business information, especially if you need to issue a guarantee on behalf of a specific person. Establish a debt-resolution mechanism to make sure a tax lien won’t have an impact on your application since it is a huge red flag for service providers.

Unclear Sales Volume

One advantage of opening a high-risk account is the potential to generate large sales volumes. But the best course of action is always to be transparent. If you declare volumes that are out of proportion to the size of your typical ticket, your application might not hold up under review by a service provider.

Failing to comply with Merchant Agreement Terms

If you go over the processing thresholds set in the merchant agreement of your service provider, you risk offending them. Understanding the terms to which you have signed is crucial because failing to do so could make it difficult for you to obtain future merchant accounts.

Abominable E-Commerce Enterprise

There is a list of sectors that the majority of high-risk credit card processors do not accept. This does not imply that the enterprise is unlawful. It can only signify that the processor lacks a financial partner that accepts this particular sector of e-commerce. Based on the level of risk, acquiring banks choose which e-commerce sectors they want to embrace, and the bank may simply judge your sector to be too hazardous.

The aforementioned advice can assist you in taking the proper actions to quickly and easily obtain acceptance for a merchant account.

For your business’s Low, Medium, or High-risk levels, Radiant Pay has the ideal combination of merchant account services to let your profits flow smoothly. Any legitimately operating business that sells memberships, services, or goods online is qualified to apply for a merchant account.

When determining whether a business is ‘high-risk,’ many factors are considered, including the nature of the enterprise or industry, customer types, transaction volumes, geographic location, and payment terms.

Merchants dealing in the travel and cruise industries; Internet auctions; CBD; adult; forex; online gaming; casinos; and many more are all examples of high-risk merchants.

However, just because your business is high-risk does not mean you won’t be able to open a merchant account. It does, however, imply that setting one up may be more difficult. Banks and independent sales organizations that provide merchant accounts will look at how long you’ve been in business, your credit history, and any previous merchant accounts you’ve had with other processors.

Because merchant account providers want assurance that you understand the business environment in which you operate, can identify the potential risks you face, know how to prevent or reduce fraud, and understand how to manage credit card acceptance, the length of time you’ve been in business matters. Regardless of risk, the only thing with first-hand business experience that can provide this kind of insight is.

Good credit history will help you establish your credibility as a potential merchant. If your previous processor terminated your merchant account because you defaulted on payments or had too many chargebacks, it may be difficult to open a new account in the future. And if you’ve previously had a well-maintained merchant account, it’s a good sign of how you’ll handle your new processor.

Follow these guidelines to improve your merchant account eligibility:

Maintaining a good credit score: Before applying for a merchant account, remove any previous bankruptcies, late payments, or mortgages from your credit report. Contact a credit reporting bureau to obtain your credit report. Send them a letter explaining that these issues have been resolved and requesting that they be removed from your credit report. Having a good credit rating will make a lasting and favorable impression on a transaction processor, whether you own a small or large business.
Previous merchant accounts, bankruptcies, liens, or judgments should all be disclosed: You improve your credibility by acknowledging the recent financial difficulties, and you may encounter one fewer barrier to opening a new merchant account. You can’t keep information from the public record hidden.
Be willing to pay higher fees if necessary: If you need to follow special rules or pay slightly higher fees to open a merchant account, go ahead and do it! It’s worthwhile to offer your customers as many non-cash payment options as possible. It will aid in the generation of revenue and the stimulation of impulse purchases.
Look for a credit card processor that best fits your requirements: Learn more about:
The discount rate: The fee paid to the merchant account provider as a percentage of each transaction. The processor may charge a higher percentage of your monthly charges if they are less than a certain amount.

Transaction Fee: For each transaction processed, a flat fee is charged.
Monthly minimum fees: If the merchant’s discount rate and transaction fees do not add up to the monthly minimum specified on the original merchant application, the merchant account provider collects these fees from the merchant each month. If the monthly minimum volume is not met, it usually costs $25 per month.

Reserve Fees: If your credit history is suspect, or if you own a new or high-risk business, you may be required to open a reserve account to protect the processor from future losses. Your reserve account is based on a percentage of your total sales.
Chargeback Fees: These are the fees a processor charges to cover disputed charges.
E-commerce: If you’re an e-commerce merchant, inquire about the costs of storefront solutions, such as shopping carts, Web hosting, payment gateways, virtual terminals, virtual checks, databases for order fulfillment, customer tracking, and a way to calculate tax and shipping charges, from your prospective processor.
Gadgets: Point-of-sale terminals, printers, and peripherals, as well as installation fees, are included.

If you follow the steps outlined above, the process of opening a merchant account should go smoothly. And, in the end, getting approved will put you on the road to increasing your company’s revenue. Operating a high-risk business does not rule out the possibility of accepting credit cards.

Regardless of the factors mentioned above, Radiant Pay is committed to providing you with payment processing solutions that are well-tailored to your business needs. We are a leading London-based agency providing payment solutions to the online business and all the e-commerce enterprises across all “legal” industries. Our clientele is not limited in terms of business size, risk status, or transaction volume and can provide tailored solutions for any type of client and their online businesses.

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