High Risk Merchant Account: It’s Not As Difficult As You Think.
In 2022, QuadraPay added five new High Risk Merchant Account Providers. Our merchants can have a better chance of approvals and get even better rates with these new options. Fill out the contact form, and our team will start working on your requirements asap.
The High Risk Merchant Processing Landscape
It is tough to get high risk merchant accounts in today’s world. The primary reason is that there are not so many high-risk credit card processors. Since there are very few solution providers, they get many applications. The provider’s goal is to onboard merchants that attract the lowest amount of risk.
High-risk account acquirers follow proper underwriting guidelines and risk analysis steps. They check the business model and review KYC documents submitted by the merchant. When you type high-risk credit card processing on Google, you get many results. In reality, there are only a few acquirers that onboard high-risk merchants.
These affiliates and resellers help the high risk PSPs and acquirers find leads. Getting instant approval for high-risk industries is impossible. Underwriters take time to check and approve applications. They may serve some high-risk sectors, but they can not support any illegal activities. It always helps the merchant to be honest with the processing company.
Why You May Need High Risk Merchant Account?
There can be thousands of reason why you may need the services of a High Risk PSP. Few of the following are these.
The High Risk Industry Factor.
A site selling erotic magazines may attract reputation risk. A site selling low standard televisions may attract credit risk. Some industries are subject to high scrutiny from acquiring banks. Few of these sectors are Credit Repair, CBD, Nutraceuticals, Forex, Crypto & Gaming. Most of these industries have either high credit risk or high reputation risk. Banks may work with merchants from the above industries but there is a condition. The acquiring institution must be have the required service provider type registration. The payment industry classifies the payment processors based on many factors. One factors is the kind of merchants they work with. Yes not every processor is a High Risk Processor. QuadraPay takes your application to those acquirers that high risk approved.
Does that mean any industry is OK with a High risk Merchant Account Provider? The Answer is NO. There is a difference between restricted and prohibited.
Ecommerce And High Risk CNP Issue
Most eCommerce card processing companies prefer to work with merchants from low-risk industries. Ecommerce sites are high risk oriented for banks. Most transactions on these sites are in the Card Not Present Scenario. There is no face to face interaction between merchant and cardholder. Thus it elevates the risk of fraudulent transactions. High risk merchant accounts include features like 3DS, AVS and fraud reduction tools.
History, Financial Capacity, & Background.
When you apply for a merchant account the bank will check many endpoints. It will be almost impossible for you to hide things that banks must know. So its better to be honest with them and present the clear and honest picture.
Previous Businesses. Suppose the last business of the merchant had a terrible reputation. In that case, the new business application may also get declined. The underwriters may think that the new business will work before the old company. If the situation is so bad, you should switch to alternative payment modes. Build some reputation and revisit the PSP.
If you think that the bank must know about your past and other present businesses then let them know. They will any ways find out but if you don’t tell them upfront then it may not go well.
Organisation Structure. Sometimes few businesses may have very complex organisational structures or ownership. To make things easier at Quadrapay, we ask merchants to share an organogram.
Previous Owners. Sometimes, the company’s previous owners may also become the reason for application decline. If the previous owner is infamous or may have huge debts and a broken credit score, the underwriter may say no. They may think that the new owner is a front for the old owner. This is a credit risk.
Banks like working with clients that are capable of handling credit risk. This helps the bank with risk mitigation and risk reduction. So don’t be shy in sharing your strong personal and business bank statements. They wont take that money but you may earn some points in the approval sheet.
Banks do not like working with merchants from some sanctioned nations and territories. They also don’t work with people or organisations that are on sanction list. Banks may scrub court records and and they don’t like merchants with criminal records.
Bad Credit Score.
By Default, merchants with a low credit score carry more risk than those with a high credit score. It does not mean that merchants without excellent credit score will never get an account. They should approach low risk credit merchant account providers. The good news is that QuadraPay specializes in assisting low risk as well as high risk merchants.
Banks and payment institutions prefer to work with merchants already accepting card payments. They can check what volume the merchant will bring in and what is the expected chargeback ratio. Some high risk merchant account providers may charge higher and say yes to startups. Acquirers charge this fee for merchants in specific industries. In most cases, they would ask for upfront setup fees. This is for high-risk merchant registration fee.
Cross Border Transactions.
Payment processing companies have fixed jurisdiction for merchant acceptance. PSPs allowed for the EU region can only operate in the EU and must follow EU directives. PSPs in CEMEA can offer services in the same region and must follow local regulations. That means a PSP can not cross its jurisdiction for underwriting a merchant. They may allow traffic from the external areas. An EU processor may allow USA, LAC, CEMEA, AP Traffic with some restrictions. Cross border transactions are also a risk factor. Cross-border transactions are in vogue, and many High Risk Merchant Accounts offer this.
High Monthly Sales Projection.
The merchant account application has many fields to scan the business. After in-depth analysis, decide the monthly expected sales volume. Sometimes merchants think that a giant sales projection will impress the underwriter. In reality, it increases credit risk. Higher forecast and lower credit score with inadequate financial standing will not help. Be realistic and state what is achievable.
Large Ticket Size.
High ATV. The ticket size is the average value of each transaction. Like the above-discussed item here, merchants also think high ATV will help. But it makes things difficult. What we are trying to say is that be as realistic as possible. If your monthly sales volume is 5000 Euro, please don’t claim to do a 1 million Euro worth business each month. It does not help anyone.
High Risk Merchant Accounts are not allocated based on ATV or expected volume. Transaction value in most high-risk industries may be higher than in low-risk industries. The bigger the transaction value, the more significant the risk of chargebacks. You know why getting a merchant account for precious metal sales is tricky. Merchants selling Gold and Silver coins also face similar challenges. Companies selling expensive earrings and expensive watches face difficulties in getting an account.
High Chargeback To Sales Ratio.
When you apply for a merchant account, you will submit your last processing history. The document is first checked for genuineness, and then, the underwriters look at data. Your processing history will help the processor understand the following.
- Expected Monthly Sales Volume/Average Ticket Size
- Average Chargeback Volume/Average Chargeback Percentage
- Average Return Volume/Average Return Percentage
If the processor sees a more significant chargeback ratio on your account, it may say no. In this situation, merchants can approach the alternate processors that offer APMs. Some processing companies use CDRN and Alert services at the gateway level. The merchant has to use this service. These processors can handle a more significant risk.
Merchant Listed on Match or TMF List.
In 99% of cases where the merchant is on TMF/Match there is no credit card processing solution. Yet, in rare cases, you may get a yes. This depends on how much time and effort your PSP spend on the application and what was the reason for listing. The best solution for TMF listed merchants is to use a non-card scheme solution. Alternative methods like SEPA, ACH, Echeck, Interac and EFT are popular.
$1 Trial/Free Trial & Recurring Payments.
Many companies offer free trials. Some weight-loss companies also provide a $1 trial. Customers may find these offers attractive. They sign up and later forget to cancel. After the trial period, they notice card charges. This attracts chargebacks that may create challenges for the merchant and the PSP. This may create problems for the financial institution as well.
Factors That Make A Good High Risk Credit Card Processor.
Low Rate Of Transaction(TDR/MDR).
Do not pay above the industry standards. Remember, a very high transaction fee is a hole in your pocket. Since Quadrapay lets you work dircet with the acquiring institution you pay low fees.
Small Rolling Reserve.
High-risk processors may ask the merchant to agree on a rolling reserve. It is usually a % value. Try to get it negotiated below 10 %. Some accounts may be available at a budget of 5%. Request them if they can reduce the rolling reserve percentage. The reserve amount comes back to the merchant after 180 days. It’s better to have that money in your account than with the processor.
Fast Settlement Payout Period.
The payouts period is usually 2-3 working days for regular businesses. For high-risk businesses, this can be more than regular days. If the provider asks you to accept monthly payments, look for another provider.
Low Or Nill Arrears & Hold-back.
Processors ask the merchant to accept an arrears clause to reduce the credit risk. It means that the first payout will be after a specific time frame. Try to see if you can get some negotiation here.
Easy Contract Term.
The shorter the contract term, the better it is. If the PSP wants you to sign a very long contract, try to negotiate on a minor contract term. You may get better rates from another processor in six months.
No Account Termination Fee.
Some providers may put a penalty if you close the account before the contract end day. Try to negotiate and see if the processor waives this.
Zero Setup Fee.
Usually, the setup fee for a high risk credit card processing account is zero. Still, few processors might charge a setup fee. It will be great if you can convince the provider to either waive the setup fee or offer some discounts. Keep in mind that High Risk registration is different from setup fee.
Low Monthly Charges.
You may agree to a small monthly fee. The fee becomes a burden if the merchant does not process enough transactions. If the monthly payment is very high, search for another high-risk provider.
Birds of a feather flock together. You should only work with processors that have a good reputation. Investigate online and see if they have any negative reviews. Ask the provider about their point of view on the negative review. Sometimes there may be some anonymous reviews. You should trust the reviews that appear to be genuine. Few of the largest processors in the world may have a few negative reviews. You should not consider all reviews to be honest and trustworthy. Some may be from competitors. Use your analysis.
Merchant Account Not Holding funds.
You do not want to work with a payment processor that does not respond to your queries and keeps all your money. The fact of the matter is that there are many sharks out there. These companies usually do not reveal their address and business registration number. Before accepting the offer, check if the processor is infamous for holding funds.
Industry Payment Security Compliance.
All Credit and Debit card payment processors must follow industry standards. Most of the time, they display their compliance status on the website. In case it is not visible, ask for it.
Super Easy Payment Gateway Integration Process.
There is no point in getting a high risk credit card processing account if it is too hard to integrate. Ask the processor how easy it is to integrate the payment gateway to your website. Ask them if they have ready-made plugins. Many high-risk processors display the API details on their websites. Try a sandbox integration before signing the agreement.
High Transaction Approval Ratio.
A significant challenge in the High-Risk processing industry is the approval ratio. A solution with a very high decline ratio can affect your business. Work with a processor that offers a high approval ratio for card transactions. You should prefer to work with an acquirer or PSP from the same zone where the cardholders are. European union merchants should choose processors from the EU or European Economic Area. This will be helpful as the processors may be comfortable with the local bins and local cards. For payments from Latin America, approach a South American high-Risk processor. Quadrapay can help you find processors in different locations including EU, Canada & USA.
Various Pricing Quote.
Perform a detailed comparison of rates, fees, and charges. It may help you to avoid many hassles. Beyond these factors, get quotes from more than three providers.
Top Sins Of High Risk Merchants
Hiding Real Business Model.
Some merchants think that they may hide there real business model and fool the banks. The fact is that most of the times these applications will never get any success. Merchants may try to do the same because of any reasons but it is a violation of the merchant account agreement. It may attract heavy penalty and may also put the merchants record in the match list.
Incomplete Website. Can You Drive A Car Without Fuel?
You can’t get a high risk merchant account without an active website. If you apply with a static web-page that lowers your possibility of getting approved. PSPs want to work with responsible business owners.
Copied Content On The Merchant Site.
Copied content can lead to the closure of the merchant’s website. It also displays the unethical approach of the merchant. The processor may check the entire website in a few seconds for plagiarism. So make sure that your website has authentic content.
Low Or No Traffic On Website.
The high-risk processor will only make money when you generate sales on your website. Will you be able to create sales if there is no traffic on your site? This is the reason why PSPs will check the traffic on your site. If the site has low traffic, they may straight ahead say no. If you plan to make money by using PPC services, you may share a plan for the same. Let the PSP know about your marketing budget and schedule. High traffic from restricted nations can also be a problem.
Negative Reviews About The Merchant On The Internet.
Your online reputation mirrors your customer care and product quality levels. If a company has many negative reviews, the processor may say no. Various Online reputation management companies may help you fix this.
What Are The Documents Required For High Risk Credit Card Merchant Account?
If you want to make more sales and profits from your high risk business, then you are at the right website. We at Quadrapay provide you with payment processing for you to achieve more success. We have made the on-boarding procedures simple and straightforward. As a business owner, you need to completely fill the merchant application form. Fill all the necessary pieces of information and submit it with the KYC documents.
Some of the KYC documents for a high-risk credit card merchant solution are as follows:
- Government-approved identities like a passport or a driving license.
- Business Registration Certificate.
- SSL Certified website.
- Latest Bank statements up to the last three months.
- Latest processing statement for the previous three months.
- Voided Check or bank letter (with full business registered name)
High-Risk Credit Card Processing FAQ
How to choose the billing descriptor for my merchant account.
Make sure you mention an easy to recognise descriptor on the application form. This is the name that will appear on the credit card billing statement of the customer. Many companies put their support line number as a billing descriptor. This helps customers call the support line number if they do not recognise the charge. An irrelevant descriptor can create unnecessary confusion in the minds of the customers.
What is the underwriting process of high risk credit card accounts.
With High-risk accounts, the scrutiny is intense. High Risk Merchant Account Providers reduce risk by implementing various measures. General processing companies also follow these measures.
Strict Underwriting Process. The underwriting team looks at various endpoints to identify the merchant’s genuineness. They reject any application that appears to be false.
Is there a limit on per item ticket size.
When a merchant fills a merchant account application, he mentions these. Smallest ticket size. Highest ticket Size. Transactions per month. Monthly sales volume. Based on these values, the processor limits the per ticket size. Credit card processors also set the merchant’s sales forecasts for internal use. The account may go on hold if the merchant experiences a spike in any projected values.
Where can one find information about high-risk credit card processors?
If you’re looking forward to knowing where exactly you can find information about high-risk credit card processors, you are at the right place.
The best approach would be to send your application to payment service providers and ask them whether they are comfortable on-boarding a high-risk business like yours. If the processor is certified as an HR ISO, High-Risk Internet Payment Facilitator or ISO High Risk then chances are that you may get a yes.
Please keep in mind these processors do not onboard or support illegal businesses. Your company must be legal and should be from a country where the on-boarding is available by the payment service provider.
The Quadrapay team will be happy to evaluate your application and send it to the right payment service provider that may work with your specific industry type. Our team will be glad to help you with the integration process. Please remember that high-risk credit card processors may require a 10% rolling reserve to reduce the credit risk.
What Is The Role Of A High Risk Merchant Acquirer In Processing Transactions?
Quadrapay Proudly Offers Robust Solutions From Tier 1 High Risk Merchant Acquirers
You might hear the word “acquirer” or an acquiring bank many times. Sometimes, it can mean a business or corporation that takes over the other company by purchasing it or through any different action. But in the industry of payment processing. This means as a merchant account. Or a settlement bank which is an authorized member with the card providers of credit card associations. This high risk merchant acquirer analyzes the application and then accepts a high-risk business by approving a high-risk merchant account. This high-risk merchant account provided by high-risk merchant acquirers has several benefits. It helps a company accept debit card and credit card payments securely.
The high-risk merchant acquirer or the payment acquirers exchanges the payment information. This includes an exchange with the card issuer on behalf of the business merchant. Post settlement, the high-risk business merchant receives the fund. Deducting the high-risk merchant acquirer charges, interchange charges.
What is a high brand risk merchant?
Payment processing companies may work with merchants from select industries categorised as high-risk brands. A high brand risk merchant is the same as a high-risk merchant. Acquiring companies charge an additional fee if the applicant is a high brand risk merchant. PSP may charge a setup fee and a monthly high brand risk fee. Some of the following MCCs may be subject to monthly upfront high brand risk registration fees.
MCC 4816, MCC 5122, MCC 5816, MCC 5912, MCC 5962, MCC 5966, MCC 5967, MCC 5968, MCC 5993, MCC 6051, MCC 6211,MCC 7273, MCC 7841, , MCC 7994, MCC 7995,MCC 9406.
What is Risk Assessment In High Risk Credit Card Processing.
The risk team looks at the merchant’s profile. They try to understand the level of risk the merchant will attract after approval. This is the risk exposure analysis. High-risk processors cannot violate the guidelines of card brands and governments. They can take a limited risk but can never cross the limit.
Why High Risk Acquirers Charge A Rolling Reserve.
Rolling reserve that keeps growing. Processors deduct rolling reserve on each transaction. This amount stays with the merchant account acquirer for 180 days. High-risk processors may use this money to handle merchants’ chargebacks and refunds.
Does the acquirer perform surprise audits.
Performing checks on merchant accounts help processors to identify high risk activities. Processing companies check accounts at regular intervals. They also keep an eye on the business model of the merchant. The increased risk may force the PSP to close the account. Its better to follow the agreement and always try to keep the credit risk low.
Can i get a Virtual terminal With High Risk Credit Card Processing Account
No Virtual Terminal or Moto Panel. In the US and EU, low-risk merchants may get Virtual Terminals. Processors generally do not offer virtual terminals for high risk merchant accounts. This helps the processors to reduce fraudulent transactions to a great extent.
What Does High Risk Merchant Service Mean?
In terms of business, there are two types of businesses:
Low-Risk business and high-risk business.
There can be several reasons for a small business to be categorized under the high risk industry, which further requires having high risk merchant service. Some of the reasons behind this can be as follows:
- You are processing a transaction volume of more than 25k per month.
- You are selling most of the products and services by using recurring billing methods.
- The business that you are operating is in a highly regulated industry.
- Your business payment processing involves a large ticket transaction.
- The business merchant shows a bad credit report
- Performing a lot of transactions with a CNP (card not present payments)
How Much Time Does The High-Risk Merchant Acquirers Take To Fulfill the Funds Settlement?
It depends on the contract between the high-risk business merchant and the high-risk merchant acquirers. Generally, It may get settled within 48 hours. This includes the complete procedure of transaction initialization by the customer. And then finally being paid into the business merchant’s bank account. But it can also take up to 3-4 days as per the agreement of high-risk merchant acquirers.
Does QuadraPay Have Any High-Risk Merchant Service Solutions For The UK and EU or is it only for US?
Are you a UK based merchant? Are you doing high-risk businesses like CBD, online dating, online gaming and adult entertainment?
Now, no more challenges to getting a high-risk merchant account in the UK. The thing matter is your genuineness and whether you are doing a legal business under state and federal laws. Most high-risk companies find it challenging to choose a suitable processor and waste a lot of their hard-earned money. Well, this is not with us. We have partnered with the global payment processors to streamline the process and find the right High-risk Merchant Service Providers in the UK. Quadrapay understands the high-risk merchants, and our approval rate is 99% of all the applicant merchants.