Tier 1 Quality High-Risk Merchant Account
A high-risk merchant account is a specialized credit card processing account for merchants operating in high-risk industries. These industries face multiple problems, including higher chargeback ratios, larger average ticket sizes, or reputational issues. These factors make an industry risky, and a merchant operating in such an industry is a high-risk merchant.
For any business, the ability to accept credit and debit card transactions is paramount. Not having this ability restricts the growth of the company. Traditional payment methods like cash and bank transfers are not very customer-friendly. Every buyer wishes to spend less time while making payments online. High-risk merchants that do not have a support system for card processing find it hard to achieve better conversion rates on online sales.
However, there are some sponsor banks and payment processors that are willing to take calculated risks, and they onboard merchants from many high-risk industries. These processors offer high-risk merchant accounts. Fortunately, QuadraPay has extensive connections with such partners, and it’s time for you to take advantage of our network.
Features of high-risk merchant accounts that eliminate merchant fear.
Better Chargeback Control: Chargebacks are a significant concern for high-risk merchants. It is common for merchants from various industries to experience a slightly elevated chargeback percentage compared to low-risk industries. High-risk merchant account providers use a variety of tools to reduce chargebacks. Some of these tools include CDRN alerts, 3DS, AVS, and card velocity limitations. With the CDRN alert solution, high-risk merchants receive notifications at the time of dispute, giving them a window of opportunity to resolve the issue before it becomes a chargeback. 3D secure, AVS, and card velocity checks are default measures to prevent fraudulent transactions.
Stable Accounts: Working with a low-risk aggregator exposes a high-risk merchant to the risk of account shutdown. However, this is not the case when legit merchants work with the right payment processor skilled in handling high-risk accounts.
Stability of Customers: High-risk merchants, when working with a low-risk payment processor, always fear losing customers and business due to difficulty in processing payments. This fear often causes high-risk merchants to feel constrained when using their accounts, limiting their business’s growth. Merchants worry that if they start processing a lot of transactions and their account goes under review, they may not be able to process more orders, leading to the loss of existing customers and missing out on acquiring new ones. With high-risk merchant processors, merchants can confidently accept orders.
No Fear of Reputation Damage: Some merchants who are completely new to the payment processing industry and are considered high-risk may have a different perception of high-risk merchant account processing. Many of these merchants believe that such merchant accounts will damage their reputation or label them as lower-value entities in the banking circle. However, this is not the case. High-risk credit card processors are legitimate acquiring institutions that do not engage in such practices. Merchants can freely work with these payment processors without fear of reputational damage.
No Predatory Pricing: Imposing extremely high payment processing fees is truly demotivating for high-risk merchants. This leaves less margin for profit. It’s a fact that the high-risk credit card processing industry does not have uniform pricing, but if merchants work with partners like QuadraPay, they can have the opportunity to work with highly economical and honestly priced payment processors.
Global Processing: Every merchant, regardless of the industry they operate in, prefers to expand to new geographies and tap into new markets. This is why high-risk payment processing companies work hand in hand with merchants, allowing them to accept payments from customers in multiple countries and offering various payment methods to facilitate the expansion of their business.
Low Rolling Reserve: A high-risk merchant’s rolling reserve is 10%, according to industry standards. That means the processor holds 10% of the transaction value in reserve for around six months. The QuadraPay team collaborates with merchant processors that have flexible terms for rolling reserves. Some merchants can qualify for a lower rolling reserve or duration.
KYC documentation for high-risk merchant accounts
You will need to provide some KYC documents to obtain a high-risk merchant account. These include government-approved identification proof and a business registration certificate. You’ll also need to provide your latest bank statements and processing statement, along with a voided check or a letter of good standing from your bank. You can speed up the application process if you have all these documents ready. Contact us today to get a detailed list of KYC documents specific to your industry!
FAQ: High-Risk Credit Card Processing
What are the biggest mistakes that high-risk merchants make?
High-risk merchants commit mistakes that can reduce their chances of receiving approval for a merchant account. Attempting to conceal their true business model is a major mistake that violates the merchant account agreement, potentially leading to penalties or inclusion in the match list.
An incomplete website is another mistake. Payment service providers (PSPs) want to work with responsible business owners, and having an active website is a requirement for a high-risk merchant account. If you apply with a static web page, your chances of approval decrease.
Copying content from other websites is also a mistake that can harm the merchant’s credibility. The PSP may check the website for plagiarism and reject the application if they find copied content. High-risk merchants should ensure that their website has original, authentic content to avoid this issue.
Low website traffic is another issue that can impact a merchant’s application. PSPs want to generate revenue when merchants make sales through their website so that they can check the traffic on the site. If the website experiences minimal traffic, the application might face rejection. In this case, sharing the marketing budget and schedule may help, especially if the merchant plans to use PPC services. However, high traffic from restricted countries can also pose a problem.
Lastly, negative online reviews can damage a merchant’s online reputation and reduce their chances of approval. The PSP may reject their application. To mitigate this issue, hiring an online reputation management company may help address negative reviews and improve the merchant’s online reputation.
How to choose the billing descriptor for a high-risk merchant account
High-risk merchants should ensure that their billing descriptor complies with the rules and regulations set by the credit card associations. These rules require merchants to provide a clear billing descriptor that helps customers clearly recognize the transaction. Keeping the billing descriptor consistent across all payment channels, including online transactions and in-store purchases, helps customers recognize the merchant and reduces the likelihood of chargebacks.
Is there a list of industries that are considered high-risk by merchant-acquiring banks?
The acceptable industry list keeps changing based on many factors; however, these industries are generally considered high-risk by credit card processors. Some of the industries that require high-risk merchant accounts to accept credit card payments include the following:
Accounts Receivable Management, Adult Novelty, Air Charters, Airlines, Alcoholic Beverages, Ammunition, Asset Protection, Auctions, Bail Bonds, Betting, Buying Clubs, Cannabis-Related Business, CBD, Coaching, Collections, Continuity, Credit Repair, Cruise Lines, Currency Exchange, Dating, Debt Collection, Debt Consolidation, Diet Programs, Digital Goods, Direct Marketing, Document Preparation, E-Cig, Vapes, Educational Services, E-Games, Event Ticket Sales, Extended Warranty, Fantasy Sports, Financial Aid, Firearms, Fireworks, Forex Brokers, Free Trial Offers, Furniture, Future Delivery, Gift Card Reseller, Grants, Hemp, Kava, Kratom.
Some other high-risk industries include Laboratory Testing, Lead Generation, Medical Discount Membership Plans, MLM, Money Services Business (MSB), Moving Company, Negative Option, Nutraceuticals, Paraphernalia, Pawn Shops, PC Support, Penny Auctions, Pet Store, Pharmacies, Precious Metal, Prepaid Phone Cards, Quasi Cash, Raffles, Scholarships, Seminars, Skilled Games, Smoke Shops, Sports Forecasting, State Lotteries, Stock Trading Consulting, Subscription, Supplements, Sweepstakes, Telemedicine, Third-Party Gift Certificates, Timeshare, TMF Merchants, Tobacco Nicotine Sales, Tour Operators, Travel, Travel Agencies, Vacation Clubs, Venture Capital, Vitamins, and Wine Clubs.
