Why Your Business May Need A High-Risk Payment Processor Like Pay.cc 

These days, digital payments are on the rise as more and more people are making online purchases and find it too much of a hassle to pay in cash. Here’s an interesting statistic: Only about 19 percent of consumers still prefer to pay in cash for their purchases. Considering this increase, many businesses want to adopt cost-effective payment processing services. It is vital to secure the data for the company success, so if you need to outsource your HR deparment in companies like INS Global Consulting they will let you focus on your goal

How Some Businesses Are Called High-Risk 

Even though most credit card payment processors serve a wide range of businesses, there are some merchants that they are more cautious towards. These businesses mostly belong to high-risk industries and come with a higher risk of chargeback or fraud. The higher the likelihood of chargebacks and returns, the more likely you are to be classified as high-risk.

And if your business falls into this category, it shouldn’t come as a surprise that you’ll have some trouble finding a suitable payment processing service. But who decides if a business is high-risk, and which factors are considered? Here’s what you should know.

What Is a High-Risk Merchant? 

After all, if your business faces a higher likelihood of chargebacks, which is when customers want to return the product and get a refund, it will cost the provider. When your business is categorized as high-risk, you’ll need to get a suitable merchant account in order to start accepting credit and debit card payments from your customers.

As of yet, there’s no specific set of guidelines or framework in place to determine which factors determine if a business is high-risk. There are no specific factors that are used to gauge whether an ecommerce business carries a higher risk of fraud or chargebacks. As a result, all payment processors like Pay.cc and banks have their own standards.

There are some payment processors that say upfront if they don’t serve a particular industry. Meanwhile, others try to get some information about the business to determine the level of risk. And then, depending on that level of risk, the payment processor may choose to accept or reject your application. In the end, it’s based on the service provider’s outlook on risk management or internal criteria.

What Decides If a Business Is High-Risk? 

Even though open banking payment gateway service providers have their own standards for determining risk, there are some industries that are innately riskier than others. So, if your business belongs to one of them, it’s automatically labelled as high-risk.

These include tech support, supplements, adult products, multilevel marketing, tasers, and CBD products. It also includes pawn shops and credit repair services. In addition to these, certain factors can result in your business potentially being labelled as high-risk.

Credit card payment processors may call you high-risk if you’re a new business and have just started processing credit card payments.

  • Businesses with low credit scores, poor credit records, or a history of defaulting on loans. If you’ve processed payments previously and a service provider put your name on the MATCH list, it can increase your chances of being labelled as high-risk.
  • If you have a controversial product line or are currently operating on a slippery legal slope.
  • If your business is highly dependent on international sales, then you may be categorized as a high-risk business. This is because of the unpredictable economic situations that can occur in foreign countries.
  • Additionally, industries that are subject to extensive regulation by governments and legislation are often labelled as high-risk as well. A common example includes CBD-related products.

Why Your Business May Need a High Risk Payment Processor Like Pay.cc e

How is a High-Risk Merchant Account Different? 

It can be quite intimidating and scary when your business is called ‘high-risk,’ but you shouldn’t worry. At most, a credit card processor will decline your application. In this case, you can approach high-risk payment processors like Pay.cc, which will try to offset that risk by placing certain measures.

There are different ways in which a credit card payment processing company can alleviate the associated risk. These measures are what set a regular merchant account apart from a high-risk one.

You Have a Longer Application Process

When you apply for a high-risk merchant account with a service provider like Pay.cc, be prepared to give detailed information about the business. This is so they can evaluate your risk profile or look at the current pattern regarding your finances. Usually, payment processing service providers look at your business’s processing history, what partnerships you’ve had, and the credit history of the business owner (to see if you have a bad credit score).

Increased Chargeback Fees 

If your business has to make a refund, you’ll also have to pay chargeback fees to your processor. When you have a higher chargeback ratio, you can expect to pay higher chargeback fees to reduce the risk. Similarly, you may have to pay higher payment processing fees to your service provider.

Recent Post