Business is all about catering to the needs of customers. Like the needs of different people are different, similarly, businesses also are not all of the same kind. But, when it comes to providing customer services, it is natural for customers to expect seamless service that includes ease of payment as well. In today’s time it is common for people to use different payment methods that include the use of credit cards, debit cards as well as online transfers and much more.
For this service, businesses require a merchant account. Now, when it comes to merchant accounts, businesses usually seek assistance from domestic banks or merchant account service providers. While these service providers usually assist businesses that are low risk with ease, it is the high risk businesses that usually come under scanners.
What are high risk businesses? Why is getting merchant accounts for them difficult?
High risk businesses is no hard and fast term, but usually business that deal in unconventional services or those that carry along with them a risk of frauds, chargebacks, or loss are usually considered high risk. These businesses do not necessarily have all their records and paper work in place, or perhaps deal in sale of things that are prohibited in open market etc. A bad credit on the part of the owner could also be a reason the business is classified as ‘High risk’.
Getting merchant accounts for such high risk business is usually a challenge for the simple reason that conventional banks and merchant account service providers are usually not willing to take the risk. Of course, each service provider has different set of rules and guidelines for it. A high risk business for a bank may not be so for another. However, some of the businesses that are commonly considered as high risk are as follows:
Business dealing with the adult entertainment industry including dating sites, sale of pornographic material, phone chat numbers, adult books, adult membership forums etc.
Dealing with cigarettes, e-cigarettes, nicotine cartridges and other products that include nicotine
Business dealing with sale of copies of branded products like bags, sunglasses, shoes, clothing etc.
Tech support businesses
Services that deal with marriages or match matching
Hypnotism, astrology, horoscope and other such services
Sale of antiques, collectibles, memorabilia, autographed material and other such. Business that deal with sale of health supplements, energy boosters, performance enhancers and other such. Discounts or coupon offers that are offered on medical services and health checkups. There are many other such business that are classified as high risk. In case you are dealing in any of the above business, chances of getting a conventional merchant account are usually difficult.
How do high risk business get merchant accounts?
Just as with any other business, high risk businesses also require merchant accounts to cater to the needs of their customers. The logic is simple, if they do not provide the service to customers; they can very well lose their business to a provider who does offer services. Conventional banks and merchant account providers usually weigh the risks and whole lot of other factors before deciding if they wish to approve your application or not. But in case if there is even the slightest bit of risk, most service providers are not willing to take the risk.
Thankfully, though conventional banks and service providers may be apprehensive there are some high risk payment gateway providers as well. These high risk merchant account service providers have slightly more relaxed rules when it comes to businesses, and are more willing to take risks with these businesses. The only flip side to this is that these service providers usually charge a much higher rate as compared to domestic service providers.
But again they are also willing to take the risk that conventional service providers are not. And if a high risk business does indeed need the merchant account they usually have to make peace with a higher rate, as well as higher processing fees and other such expenses. However, while dealing with high risk merchant account providers it is usually advisable to trust the names that have a reputation, even if it means paying some more money. As there are also many fraudulent and scams under the garb of merchant account service providers who can potentially put your business at risk. It is important to read about the chargebacks, the termination fees and also about the time line and any kind of additional fees that is charged.