The ability to accept credit and debit cards is crucial for online businesses. However, a payment processor is required before electronic payments can be accepted. You might think of this organization as a go-between for you, your bank, and the credit card companies.
Some payment processors will only work with businesses they deem to be completely risk-free. High-risk businesses will have fewer options when it comes to payment processors.
Learn all about high-risk merchant accounts and processing in this in-depth essay. In this article, we will discuss the reasons why high-risk businesses may have to pay more to process payments as well as the additional costs and obstacles they encounter as a result. At last, we’ll single out a few service providers who can aid businesses in high-threat industries.
High-Risk Merchants Are… Exactly Who?
You may be unsure as to whether or not merchant banks will accept your firm due to the potential danger it may pose. If you want to know if your business is a high risk, consider the following questions.
- Has your company ever had its credit card processing services revoked?
- Is it true that you have submitted your application to multiple processors and have received no responses?
- How common are chargebacks for your company?
- Have you noticed that your customers tend to spend a lot on your products or that you have a long lead time before delivering their orders?
The answers to these questions indicate whether or not your industry is considered high risk. Even if you have a history of operating an ethical company, you may be pigeonholed because of the industry in which you operate. Banks also view as extremely risky any company that has been blacklisted by a credit card processor or that appears on the TMF/MATCH list. A company will be classified as high risk if its owner has poor credit or a low credit score.
What Kinds of Businesses Are Considered High Risk?
In the absence of a proven track record for successful payment processing, certain businesses will be labeled as high-risk. However, the vast majority of high-risk merchant processors are thought to be so because their industry has a poor image with regulatory bodies and card brands or because they tend to have high chargeback ratios. To see if your company is included on the high-risk merchant list, look at the primary sectors covered. Companies that choose to list there must comply with a much more stringent set of rules. Constraints limit the availability of resources that could benefit low-risk firms.
The following are examples of high-risk sectors:
- Cannabis-related products
- Health and beauty products
- Telemedicine
- Travel related services
- Gambling
- Antiques and collectibles
- Credit repair
- Tech support
- Dating sites
- Adult sites
- Pawn shops
- Furniture sales
- Firearms and ammunition
- Liquor
- Pet shops
- Computer hardware
High-Risk Merchant Account Services That You Can Depend On
Businesses in industries with age restrictions, like tobacco and cigarette sales, or those with high rates of fraud and chargebacks, like dropshipping, nonprofits, and web design, are considered high risk. It is very uncommon for these companies to have difficulty locating a merchant account provider or high-risk payment solutions willing to work with them.
Fortunately, these companies have access to a number of viable alternatives that provide affordable rates, widespread support, and a selection of convenient high-risk payment processor.
1. PaymentCloud
There are no minimum contract terms with PaymentCloud, and deposits are made quickly. It’s an excellent choice for small businesses because it works with high-risk merchant account instant and has a lot of integrations.
Once you’re onboarded, it continues to provide dedicated support for critical functions, like managing the migration of cardholder subscriptions and setting up enhanced fraud/filtering for your payment gateway.
PaymentCloud also makes it easier to switch by giving you a pricing plan you’re already used to. It also works with all payment gateways, so you can keep using your current provider or get help selecting a payment gateway for high-risk business that works better for you.
Pros
- Works with all payment gateways and most e-commerce platforms
- Easy to apply and set up
- Smooth transfer of merchant accounts
Cons
- Payment gateway and virtual terminal fees are charged every month
- Few hours for customer service
- High costs if your firm isn’t high-risk. Only third-party POS
2. Durango merchant services
The high-risk payment processor experts at Durango Merchant Services have been in the business for quite some time. It is one of the more flexible high-risk merchant account providers, especially when it comes to enabling small businesses with bad credit to get payment processing services.
It is an excellent choice for online businesses because it has its own shopping cart technology called Durango Cart and a built-in load balancing mechanism in the Durango Pay payment gateway. Durango Merchant Services also works with firms on the MATCH list and those that are based outside of the United States.
Pros
- High rates of acceptance and fast sign-up
- Free tools to stop fraud and advice on how to use them
- Merchant account for several currencies
Cons
- Mountain time has a few hours of support
- Doesn’t work with companies that offer computer support through the Internet
3. First card payments
It has been active for 20 years, and it has partnered with 30+ financial institutions, making it easier for its high-risk merchant clients to get approvals. It can handle payments by high-risk ACH processing, in person, and online. It works with practically all types of high-risk merchants, even those that are based overseas, and it specializes in working with B2Bs. The system also helps run a business by giving services like web creation, search engine optimization (SEO), and call center services.
Even though their prices aren’t posted, we enjoyed how easy it was to get a response from First Card Payments when we asked about them. This was true of most of the companies on our list. It also makes the unique promise that businesses who migrate to First Card Payments would save 25% on their current merchant fees.
Pros
- Save 25% off the current rates
- Works with merchants in other countries and specialize in integrating B2B business operations
Cons
- Very few customer reviews
- Its website has few customer service hours and frequently asked questions
4. Soar Payments
It has the most comprehensive list of industries served on its website compared to its competitors. It’s a good adult payment gateway for businesses that aren’t typical or that can’t find a processor that works with their industry.
As a high-risk merchant account instant approval service provider, Soar Payments is used by many different kinds of companies. Out of all the options on our list, it has the most direct interfaces with accounting, CRM, and ecommerce platforms. One of the things that make Soar Payment stand out is that it offers immediate online quotations and a 24-hour approval process, something you won’t find with other highly-rated services. Keep in mind, though, that there is still a process called “underwriting” that can take up to five business days..
Pros
- Instant quotes and speedy approval
- All transaction types
- No expenses for applying
- Integration with software like QuickBooks and others
- POS is offered by a third party
Cons
- Long length of the first contract
- High fines for leaving early
- Does not work with CBD merchants
- Pricing based on quotes
- Not all integrations offer services for billing on a recurring basis
- Restrictions on the approval of recurring billing
5. SMB Global
SMB Global works with Payline Data, a well-known and trusted low-risk processor, as a merchant service provider. SMB Global only works with firms that are both high-risk and international. It provides features to stop chargebacks, such as an auto-response function that lets you fight chargebacks swiftly, and two popular high-risk payment gateways alternatives, each of which works with more than 175 online shopping carts.
There aren’t many reviews from users, but those that love SMB Global say they can have a month-to-month contract with no rolling reserve restrictions and a limitless amount of processing. It’s interesting that SMB Global and Payline Data also work with PaymentCloud.
Pros
- Excellent help with chargebacks
- Supports offshore accounts and more than 175 online shopping carts
Cons
- Doesn’t have a built-in payment gateway
- More strict rules for letting CBD businesses open
- Very few ratings from users
6. eMerchantBroker
Among the few adult credit card processing businesses, eMerchantBroker (EMB) promotes itself as being compatible with CBD and hemp sellers and medical marijuana dispensaries. It says that its merchant clients’ payment processing is approved 99% of the time. eMerchantBroker reviews shows how easy it is to get started with eMerchant Broker and how customer service is available 24/7.
It may take high-risk payment gateway a few days to complete the underwriting required before you can begin accepting payments, in contrast to instant approvals offered by some other adult payment processor. eMerchantBroker, on the other hand, can approve high-risk businesses in 24 to 48 hours, making it one of the fastest choices.
Pros
- Mostly about CBD (including edibles and vape)
- Able to accept all kinds of transactions
- System to stop chargebacks
- No monthly charge ecommerce integration
- POS is offered by a third party
Cons
- Few tools for processing in person
- Contracts for a long time
- Costs for quitting too soon
- Pricing based on quotes
7. National Processing
National Processing charges different amounts for its plans dependent on the sort of business you run. It also includes programs for cash discounts and ACH transfers. With cash discounts, you can charge less for cash transactions and pass on processing fees to consumers who pay by card.
Pros
- Only exchange-plus and membership rates are available
- Excellent online reputation
- Payment processing for ACH and e-checks at a low cost
Cons
- A long-term contract may be needed to get “free” equipment
- A price is imposed to return “free” equipment early
8. EasyPayDirect
Businesses that use shopping cart software or have a preference for a specific shopping cart can consider easypay finance merchants to its an extensive list of shopping cart integrations. There’s a good chance you won’t have to switch shopping cart systems to be able to accept payments.
Pros
- Able to accept all kinds of transactions
- Integrations that are often used with shopping carts
- Accepts a wide range of industries with high risks
- High-risk merchants can use a load-balancing feature
- Easy pay merchants don’t have to pay fees to quit early
Cons
- Pricing based on quotes
- Only POS from third parties
- $99 to set up an account
9. HighRiskPay.com
High risk merchant highriskpay.com publish their rates for all businesses, including those with poor credit, in an easy-to-understand format. It also shows the rate for high-risk businesses and those that sell products with an adult theme. Even though this industry has a slightly higher rate, it only costs 25 cents more per transaction and gets charged the same percentage as other high-risk industries.
Pros
- Prices that are clear
- Able to accept all kinds of transactions
Cons
- There is a monthly fee
- POS is not on the list of services
- Integrations are limited
10. Inovio
When it comes to accepting payments online, Inovio payments stand out. It’s the best high risk payment processors with secure checkout pages, payment gateway APIs that can be changed, and the ability to manage more than one location. You’ll have a single point of contact for all of your needs related to the POS and gateway because that’s what the company offers.
Pros
- There are proprietary POS systems
Cons
- Pricing based on quotes
- There are no ways to pay in person
- Integrations are limited
11. Payline Data
Payline Data’s interchange and per-transaction rates are among the most affordable in the industry. Depending on the kinds of credit cards you accept, like Visa or American Express, its rates could save you money compared to those of its competitors.
Pros
- Prices that are clear
- Able to accept all kinds of transactions
- Common combinations
- POS is offered by a third party
Cons
- Some bad reviews talk about unexpected fees.
Some Tips on Processing Credit Card Transactions
There is good news for high-risk merchant list: some credit card processors will still accept their payments. The terms and conditions may not be as beneficial as you had hoped. But, there are methods to learn if you wish to find high-risk gateway credit card processors.
● Be open and honest
You will not succeed in fooling the credit card processor by providing only selective details about your company. The audit will tell them right away if your company poses a significant danger. Honesty and openness win out every time. If no processor accepts your application, keep trying to find one that will. It may take a while, but they exist.
● Maintain a steady amount of accessible funds.
Please provide evidence that your company is solvent, including financial statements and lists of major assets. Inventory, equipment, machinery, and tools utilized to generate income for your business all qualify as such evidence. Financial underwriters will be more likely to provide adult payment processing services if your company has productive assets, as this indicates that it has the capital to weather financial setbacks.
● Sharing your previous records for processing
Without the necessary financial means? The credit card processor will then require access to your processing history to review past payment procedures. Showing your previous processing details might reassure a new processor that your account is not linked to anything unlawful and that you cooperated with the rules and regulations, even if you were dropped by a low-risk processor.
● Restrict your processing to the allotted amount
Every high-risk firm is assigned a maximum monthly volume and maximum transaction value that, if exceeded, will result in a penalty or even account closure. Asking up front if the processor supports an unlimited number of transactions and can help you scale is a good idea.
● Make a backup plan in your head for the worst-case scenario
Because of the unpredictability of underwriting standards, several companies choose to have more than one high-risk merchant account. This means that even if one high-risk credit card processing drops you, you may still use another merchant account to continue accepting payments.
● It is recommended to begin negotiations every three months
While it may seem advantageous to have no history of successful transactions, credit card high risk processors view this as a higher risk. They will likely give you expensive, restrictive terms. Nevertheless, if you offer them three months of solid data to analyze, they may be more amenable to renegotiating rates and other aspects of the contract. Even if your initial application is denied, you still have a chance at approval after submitting three months of statements.
What high-risk businesses can do to beat chargebacks
Notwithstanding the drawbacks, some businesses opt for or are at least okay with using a high-risk merchant account. If you’re ready to take on the additional risk and share of the profits that come with working in certain sectors, you can find substantial financial rewards.
Another perk of high-risk accounts is lower chargeback fees. While many merchants choose high-risk merchant processing because of excessive chargebacks, providers are less likely to close a high-risk account for that reason alone. Whilst it may be more expensive, keeping a high-risk merchant account is the best approach to safeguard the long-term viability of a firm in the face of increased chargeback issuances.
Yet, there is an option if you are seeing a high volume of chargebacks or want to reduce your chargeback ratio to keep expenses down.
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