One way or another, you’ve been notified or found out that your business is considered “high risk”. But what does that really mean? And what does this label mean for your bottom line? If you’re unfamiliar with the term, this guide and tips will help you better understand what it means to be “too risky”, and what you need to do next.
What Makes a Business High Risk?
A high risk business is a designation given by payment processors. It simply means that the merchant is perceived to have a greater risk of financial failure, which makes processors hesitant to partner with them. Of course, any payment processing comes with certain risks for merchants, but being considered “high risk” increases the chances for acquirers and payment processors to get hurt too. Typically, receiving this label means more restrictions and significantly higher processing fees for business owners.
There are many reasons why a business might fall within this category. One of the biggest is being part of a high risk industry. Some of the industries usually flagged by processors include, online gaming, pharmaceuticals, cannabis products, adult entertainment, ticketing agencies, debt collection agencies, cryptocurrency, recurring billing/subscriptions, among others. Businesses like these tend to be more susceptible to returns, chargebacks and fraud.
High average monthly sales volume, having a new business (with limited processing history), bad credit card history, and a high chargeback ratio are also reasons why you might be deemed high risk. Being placed on the notorious MATCH (terminated merchant) list within the last 5 years is also a huge red flag to processors.
How to Secure High Risk Payment Processing
If you have been labeled a “high risk business” or have concerns you might be in the future, rest assured there are steps you can take to secure payment processing – without the fear your account will suddenly be shut down. The key is to partner with a processor that understands the challenges of being high risk and offers the solutions you need to operate smoothly.
A high risk processor with years of experience is the perfect partner to turn to. Just be sure the one you’re considering specializes in working with your business type, offers the latest features and tools and provides a chargeback protection program. With the help of these professionals, you’ll be able to operate smoothly and proactively manage threats like fraud and chargebacks.
Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated high risk merchant account processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.