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High-Risk Credit Card Processing: How Is It Done?

Firms with a substantial rate of refunds and cancellations might benefit from dependable payment processing services from high risk credit card processing and merchant accounts. Multi Currency support and refund protection may be possible through high-risk merchant accounts and credit card processing.

Your firm may be categorized as high-risk if it is in a specific sector or experiences a high ratio of chargebacks or refunds. However, most company owners are unaware they are high-risk until they apply for a merchant to handle their monthly ACH, debit, and credit card transactions.

High-Risk Credit Card Processing: How Is It Done?

Due to their business or industry practices, high-risk firms benefit from superior payment processing services when they have a high-risk merchant account. A rolling reserve appears on the account, which may assist cover fraud and transaction problems if your company processes many monthly refunds and chargebacks.


Merchant accounts with varying levels of risk

You must choose if you are a low-risk or high-risk merchant before applying for an online payment processor and merchant account. Although merchant account providers often divide organizations into one of two categories, many things may set the two apart.

Depending on your processing history, particularly your chargebacks, you may fall within the high-risk category. Here are a few traits that will define your company as high-risk. However, merchant account providers are free to add their own to the list:

  • At least $20,000 in monthly sales
  • Over $500 in credit card transactions on average
  • Doing business with nations that have a high fraud rate
  • Previous bad credit
  • Recurring chargebacks

While describing your industry when registering for a high-risk card handling and merchant account, be as specific as possible. You risk getting a quotation for an incorrect fee if you attempt to minimize your company’s procedures.


 Low-risk business account

The most crucial characteristics of a low-risk merchant are little revenue, few operations, and few chargebacks and refunds. However, there may be other needs as well. Additional traits of a low-risk trader include these:

  • Transactions made with a credit card are up to $500.
  • Monthly transactions total less than $20,000 total.
  • The sector, which includes necessities, apparel, home goods, and baby gear, is seen as low-risk.
  • Just under 0.9% of all transactions have a chargeback, which is a low percentage.
  • Low-risk regions, like the United States, Japan, Europe, Canada, and Australia, are where business is present.
  • Low returns rates.


How long does it take?

Suppose the merchant is prepared with the necessary paperwork and website compliance and promptly answers questions from underwriting and compliance. The biggest and most frequent problem with granting funds is when the merchant stalls the registration process because they are not prepared to proceed, fail to respond to inquiries, or lack access to necessary documentation. In that case, an account may open in less than five working days.

When submitting your application, remember to provide accurate and complete information. The bank’s underwriting staff will need extra time to complete its examination if more “holes” need filling. Gathering all the essential data for high-risk businesses might be complex since you must go back five years in your financial records. You will need to present personal financial details and company data. This factor is because owners, and in certain circumstances, board members, are liable in addition to the company organization when it comes time to pay chargebacks and other losses related to processing credit card transactions.

On your account application, you must also provide the correct information and clear and comprehensive information. Businesses may feel inclined to ignore details that lower their chances of getting an account authorized. The reverse of this will occur. Financial problems, including bankruptcies, liens, past-due and canceled accounts, and other similar warning signs, are public knowledge. Account underwriters are skilled at locating this information, so providing it upfront is much preferable for you than letting the underwriters do it. Not only will providing the information hasten the registration process, but it will also lessen the likelihood that your application will fail. Finding the essential information and putting it together are complex challenges for many new firms, much alone established ones.

Why Are Some Applications for High-Risk Merchant Accounts Rejected?

Business types that cannot open accounts: Before finding a processor that can handle your goods or service, it is necessary to ensure that it is lawful. Every processor has a list of forbidden goods and services they will not consider. Some will also support a limited inventory, but they have considerably stricter requirements for approval. The following are the primary reasons for application rejection:

While you may successfully get a merchant authorized despite chargebacks or fraud, you must first identify the reason. It might be challenging to get a new account if a retailer closes down for fraudulent activities. However, experts may often assist if the cause is numerous chargebacks and the retailer has made efforts to reduce them over time.

Merchant is functioning from a forbidden jurisdiction – Most processors will not work with merchants from Iraq, Iran, Syria, Somalia, and Russia, among other nations. To make sure experts can handle your account, be sure to ask the experts first.

Underwriting believes the merchant is committing some fraud – Experts often discover papers that seem to have been altered or made up, so they need to ask the merchant for backup copies. Experts must reject an offer if the merchant is unable to provide them. Additionally, experts often have to deny if the merchant’s business procedures are under scrutiny and the corporation cannot provide evidence of compliance.

This situation often occurs. The merchant is unable to provide the appropriate documentation to underwriting. However, experts have a list of necessary supporting papers that they must gather to satisfy underwriting. There may be a solution if you cannot offer them, but it often involves a decrease.

During the examination, a compliance issue may arise, including problems with the payment method, the merchant’s license, the fulfillment process, a supplier, or the website’s lack of PCI compliance. Before applying, verify the state’s licensing requirements carefully. State-by-state certification and licensing requirements differ significantly, and many firms are taken by surprise by underwriters merely because they were unaware that a license was required.


Poor individual credit history: A drop may occur if the merchant account holder, often a business owner, has a low credit history. According to the bank, a company’s capacity to pay a chargeback can only be as robust as the account holder’s credit. Cleaning up any issues with the personal credit rating before completing an account application might increase the likelihood that it will be approved.


Since various processors have varying appetites for these kinds of accounts, investing a little effort to analyze many offers may be profitable for a company. If your volume of transactions is considerable, even little variances in costs might add up to sizable amounts. Furthermore, your company will be considerably better equipped for sales development and profitability if you open an account with noticeably better conditions, including a minor reserve money requirement or none whatsoever.


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