Within the processing world, a variety of industries and businesses are considered to be high risk. If your business has already been rejected by a couple of credit card processors, you may be deemed as a high risk or your business may be regarded as being within the high risk industry.
Fortunately there are a number of account providers that cater specifically to high risk businesses and these providers will be happy to entertain a high risk merchant account.
What is High Risk Credit Card Processing
First of all, even though one service provider may consider your business as high risk, another provider may not. Really, it depends entirely upon the provider’s risk department or underwriting guidelines. Simply put, if their guidelines are very particular. However, should the guidelines be more lenient, you’ll likely be able to avail of a merchant account.
Additionally, if the service provider you apply to opts for a specialist high risk merchant service, then you should have no problem being approved. There are, however, some providers that do not specialize in high risk, but still maintain relaxed guidelines.
As a High Risk Category Merchant, What should you Expect?
The outlook here is not so good since high risk merchants are subjected to worse terms and steeper rates than normal businesses and there’s little, if any, room for negotiation.
Do be cautious, however. There are a number of ethical high risk processors, but there are plenty of unethical ones that are waiting in the wings to take full advantage. Thus, be sure to read the contract very carefully prior to making any commitment.
Assess the termination fees in addition to any other incidentals. Does the provider require a rolling reserve? If so, how much is the rolling reserve and for how long will it last? You’ll find that most high risk merchant account providers seek a reserve which serves to cover them should you go out of business or receive a high amount of chargebacks from your customer base.
What Makes your Business High Risk?
There are a variety of reasons why your business may be regarded as high risk. Perhaps it’s because your particular industry is recognized for a sizable instance of fraud or chargebacks. Or maybe your business has bad credit.
If you are an offshore business, this places you within the high risk category for some providers.
If your product (or service) borders on illegal, this likely makes you a high risk.
Should your marketing and sales tactics be questionable, you’ll probably be deemed as high risk.
The Bottom Line
As previously stated, most merchant account providers are risk averse and they do not wish to cater to any business that could pose a larger threat of losing them money. Therefore, they avoid dealing with those businesses and industries entirely.
If your business falls into this category, you’ll need to find a service provider that is favorable towards working with you and that will offer you fair rates.
High Risk business Types
Below you will find a list of high risk business types. The list is not representative of every industry and there are many more businesses that may be included.
- 1-800 type chat sites
- Airlines
- Amazon, eBay, Google and Yahoo Stores
- Antiques
- Auctions
- Brokering
- Casinos and gambling establishments
- Check cashing services
- Cigarette/ electronic-cigarette vendors
- Collection agencies
- Credit and debt repair
- Credit protection
- Debt collection
- Exporting services (non U.S. based)
- Fantasy sports websites
- Financial planning and advice
- Horoscopes, astrology and psychic services
- Hypnotists or self-hypnosis
- International merchants (non U.S. based)
- International shipping and import/ export
- Investment firms
- Life coaching
- Lingerie sales
- Lotteries
- Magazine sales and subscriptions
- Multi-level marketing (MLM)
- Music, movie, and software downloads (copyrighted materials)
- Prepaid debit cards
- Real estate
- Replica goods sales
- SEO services
- Sports forecasting
- Telecommunications
- Telephone companies
- Time-shares
- Tour operators
- Travel services
- Vacation rentals
- Vitamin and supplement sales
- Weaponry of any nature
