High risk credit card processing highriskpay.com might sound bad, but it’s not. For most small businesses, accepting debit and credit card payments is essential. However, finding a payment processor willing to work with you can be challenging if your business falls into a high-risk category.
Some industries are labeled as high-risk due to factors like fraud or higher chargeback risks. Despite these challenges, high-risk payment processors provide solutions for businesses that need help to get approval from traditional providers.
It’s essential to understand which industries are seen as high-risk. Some of the common examples include online gambling, travel agencies, and adult entertainment. While running a high risk can mean higher fees and stricter contract terms, it also opens doors to accepting payments when other options are limited.
You can run your business smoothly by choosing a high-risk credit card processor. To learn more about high risk credit card processing highriskpay.com, we suggest you read this post.
What Is High Risk Credit Card Processing Highriskpay.com?
A high-risk merchant account is a credit card processing account for high-risk businesses. Since these businesses are seen as risky by financial institutions, they face higher fees and stricter terms. One common condition is a rolling reserve, where the bank holds a portion of the business’s funds to safeguard against too many refunds or chargebacks.
On the other hand, businesses with solid credit histories and low chargeback rates are usually eligible for standard merchant accounts. Unlike high-risk accounts, these accounts come with lower fees and fewer restrictions.
High-risk accounts are necessary for businesses that face higher financial risks. However, it should be noted that these accounts come with added costs to protect the financial institution involved.
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What Is A High-Risk Merchant Account?
A high-risk merchant account is primarily meant for businesses considered risky to payment processors. Specific industries, like adult entertainment or gambling, are more dangerous due to high chargeback rates and regulatory environments.
Businesses with a history of frequent refunds or chargebacks are considered high-risk because these activities can indicate potential problems like customer dissatisfaction or fraud. As a result, payment processors may hesitate to work with these businesses.
Even new businesses without an established track record can be classified as high-risk. They may be considered less reliable without a history of managing chargebacks and preventing fraud.
High risk credit card processor accounts are designed to cater to these businesses by providing payment processing solutions that are more flexible than standard accounts. However, due to the risks involved, they often come with stricter terms and higher fees.
Which Industries Are High Risk?
Specific industries are considered high risk due to the higher risks of legal issues, unpredictable revenue patterns, or financial instability. For example, tobacco companies and weapons retailers face heavy regulation and frequent lawsuits. This makes them more prone to high legal fees and a higher risk of business failure.
Similarly, industries like travel are seasonal and heavily influenced by consumer spending. This leads to inconsistent revenue, which lenders see as risky.
Some of the most common high-risk industries include:
- Weapons manufacturers and retailers
- Debt collectors and auctioneers
- Tobacco, cannabis, and alcohol
- Health supplements and pharmacies
- Forex, check cashing, and payday lending services
- Dating services
- Gambling and sports betting
- Adult entertainment
- Travel agencies
- Subscription-based businesses
Due to the risks involved, these industries face difficulties when seeking financial services or payment processors. As a result, businesses in these sectors may need to work with high-risk credit card account providers who specialize in managing the challenges they face.
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What Is A Good Rate For High-Risk Credit Card Processing?
A reasonable rate for high-risk credit card processing is usually below 4%. Depending on the contract, some providers may charge between 3.95% and 5%.
If you have a high-risk merchant account, lowering your rate to less than 3.5% or below 3% is best.
Besides the transaction fees, you should consider other costs like monthly fees such as equipment, statements, and PCI compliance fees. These extra charges can add up and affect your overall cost of accepting credit card payments.
Having a merchant consultant review your statements is a good idea, as they can help you get a good deal.
High-Risk Credit Card Processing Fees
High-risk credit card processing is usually more expensive than low-risk processing because banks take on more risk and want compensation. However, you can negotiate with them to lower the rate so it won’t hurt your business.
Most companies that handle high-risk credit card processing charge more than 3.5% and require a three-year contract. They also have early termination fees and can sometimes hold back a rolling reserve.
- Early Termination Fee
You must pay this fee if you cancel your account before the contract ends.
- Rolling Reserve
This includes a percentage of your sales held in reserve for a set time before being released back to you.
- Liquidated Damages
A fee based on the average monthly fees multiplied by the remaining months in your contract. It’s a way for the company to reduce their risk, but these fees are only sometimes enforceable.
Unlike low-risk accounts, where monthly fees are usually low, high-risk accounts can cost around $100 per month. Additional fees include $500 for MasterCard and $500 for Visa and possible startup fees.
Many high-risk processors use a Bundled or Tiered pricing plan, one of the industry’s most expensive structures. The better option is Interchange Plus Pricing, which offers the best rates. If you are offered Interchange Plus, you are on the right track.
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Pros & Cons Of High-Risk Merchant Accounts
One of the biggest challenges faced by high-risk merchants is the higher fees. It’s important to compare different credit card processors to find the best deal for you. However, there are also some benefits to being in a high-risk industry.
Pros
Here are the main pros of being a part of the high-risk industry:
- Broader Market: You can do business with clients in high-risk countries to reach more customers than low-risk merchants.
- Chargeback Protection: If low-risk merchants have too many chargebacks, their account might be canceled. For high-risk accounts, the processor may just pause transactions rather than cancel the account.
- Higher Profit Margins: You can offer a wider range of products, leading to more revenue for your business.
Cons
These are the cons of the high-risk industry that shouldn’t be overlooked:
- Higher Fees and Rates: Since your business is seen as riskier, credit card processors charge you more in fees and processing rates.
- Increased Fraud: High-priced products are more likely to attract fraud, where scammers use stolen credit cards. These sales can be reversed later when the real cardholder reports the fraud.
- More Regulation: High-risk industries often face strict rules and oversight. For example, cannabis businesses could be forced to close if laws change in their area.
- More Stress: Dealing with uncertainty, regulations, and possible revenue disruptions can be stressful for business owners.
- Frequent Chargebacks: Customers may often dispute charges in industries like online gambling or adult entertainment, leading to high fees.
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Final Words
You must be now familiar with what a high risk credit card processing highriskpay.com is, and what they specialize in. They offer a reliable solution for businesses that need high-risk credit card processing. They understand high-risk industries’ unique challenges and provide secure and flexible payment options. With their expertise and strong customer support, businesses can accept payments and grow.
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FAQs
What is high-risk credit card processing?
When a business works with a payment processor that handles credit card payments for companies with a higher chance of chargebacks or fraud is called high-risk credit card processing.
What is a high-risk credit account?
A high-risk credit account is a credit account that is considered more likely to default or have payment problems.
What makes a credit card high-risk?
A credit card is considered high-risk if the cardholder has a low credit score, a history of late payments, or if they frequently carry a large balance. Also, if the card is used in businesses more prone to fraud or chargebacks, it’s considered high-risk.
What is the risk credit card?
Risk credit card refers to a card that carries more risk for the card issuer. This can happen if the cardholder has bad credit or is used in industries with a high rate of disputes or fraudulent activity.
What is high risk processing?
High-risk processing is handling payments for businesses that are more likely to experience chargebacks, fraud, or legal issues.
Is high credit risk good?
High credit risk is not good. It means there’s a higher chance that the person or business won’t be able to pay back the money they owe.
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