Are you in a high-risk industry and worried about a higher risk of chargebacks and fraud?
Are you struggling to find a payment processor that can help you manage your customers’ credit card payments quickly and securely?
You’re not alone.
Merchants in a high-risk vertical are types of businesses with high exposure to fraud and cashback. And many businesses find it hard to find high-risk merchant account providers.
Because of this, they go through a much more stringent process and must submit more documents than low-risk merchants.
So how do you choose a suitable high-risk payment processor for your business?
This article will walk you through the steps and crucial things to know to land the best high-risk payment processor for your business.
What is a High-Risk Payment Processor?
A high-risk payment processor is an online payment provider that handles transactions from businesses associated with higher-risk business activities. These payment service providers are specialized in mitigating the potential risk factors inherent in such businesses and provide payment processing solutions that make transactions quick and secure.
High-risk payment processors maintain the security of each transaction and verify each transaction for validity and legitimacy.
They also facilitate customer disputes and refunds when necessary, providing peace of mind to businesses with high chargeback rates.
The best payment processors provide comprehensive, full-suite payment solutions to maximize your business potential.
Von Payments enhances all aspects of your debit and credit card processing capabilities, from its suite of fraud management tools to integrations and payment gateways. Discover how here.
Reasons A Merchant Might Be Considered High-Risk
A merchant might be considered a high-risk payment processor if their type of business is often associated with fraud, chargebacks, and money-laundering activities.
Some high-risk businesses also have a bad credit score—either with recurring payment issues or a poor credit history.
Merchants with a high volume of transactions—especially those with high average order values—are also often considered high-risk. Especially with high average order values, a significant number of transactions is usually a sign of potential money laundering activities among traditional financial institutions.
Those who process international payments are more likely to be classified as a high-risk category. The higher costs associated with cross-border payments and foreign exchange fees from varying currencies increase the chances of disputes and chargebacks from customers.
And most payment processors won’t accept businesses involved in prohibited or unregulated areas such as weapons, illegal substances, and health supplements.
As a result, these merchants require an excellent high-risk credit card processing solution that can provide greater protection against potential fraudulent activity and keep merchant accounts safe.
Types of Potentially High-Risk Businesses
A merchant might be considered a high-risk payment processor if their type of business falls into a category often associated with a higher likelihood of fraud or chargeback ratio. These include the following:
- Adult entertainment
- Auto parts and accessories
- Debt consolidation
- Direct marketing and eCommerce
- e-Cigarettes and vape
- Membership and wellness
- Property management
- Trial and continuity
High-Risk vs. Low-Risk Payment Processing
Payment processing can either be considered high-risk or low-risk.
Low-risk payment processing typically requires fewer compliance checks and is generally easier to set up than high-risk payment processing.
Low-risk payment processors often have fewer restrictions on the types of transactions they will process. They tend to be more secure and reliable than high-risk processors because their clients have a better track record of paying their bills on time.
High-risk payment processing tends to involve greater scrutiny from the processor. It involves a more thorough background check on the merchant and a rigorous application process.
Higher fees may also apply for processing payments from customers deemed as “high risk” by the processor due to their past credit history or business model.
Additionally, certain high-risk processors may not allow some types of transactions due to legal or regulatory restrictions, i.e., if the business involves illegal substances.
How to Choose the Right High-Risk Payment Processor
When selecting a high-risk payment processor, there are crucial things to consider to ensure the best fit for your business. These include fees and pricing, ease of use, features, acceptance of your type of business, and security.
Fees and Pricing
Many processors charge setup and monthly fees depending on the size of your business and transaction volume.
For merchants processing higher volumes of payments or offering subscriptions and recurring payments, it’s essential to look for processors with lower interchange rates or flat-rate pricing models.
Check on additional processing fees, such as chargeback fees which some processors may charge for each customer dispute.
Most providers offer different pricing plans depending on how often you need to process payments and how large the transactions are. Review all available plans before committing to one provider to ensure you get the most bang for your buck.
Ease of Use
Look for an intuitive user interface that makes navigating the platform and managing transactions easy.
Consider asking for demos of each high-risk payment processor platform and virtual terminal, if possible, to get an in-depth look at how easy it is to use.
Many payment processors offer streamlined integration into existing websites or web applications so customers can make purchases quickly and easily without leaving their page.
Other processors may also require manual entry of customer information or even need customers to download additional software into their point of sale (POS) before making a purchase.
Be sure to find out what kind of user experience you can expect from each provider when making your decision.
Pay attention to the features each provider offers. Do they have fraud prevention measures? Are there built-in analytics tools?
What about benefits like loyalty programs or discounts? Some providers offer rewards programs where customers can earn points each time they purchase using their service.
Certain providers specialize in different businesses, such as healthcare payments or B2B invoicing providers. So be sure to choose one that fits your particular needs.
Whether They Accept High-Risk Businesses
When evaluating potential high-risk payment processors pay attention to whether they accept your high-risk merchants.
Because credit card processors see merchants with high chargeback rates as high-risk, they won’t be able (or willing) to provide payment processing solutions. Some may not grant high-risk merchant accounts due to regulatory requirements or other restrictions.
Pay close attention to what type of encryption methods they use and make sure that their system complies with industry standards like PCI DSS compliance requirements and EMV (chip) card technology support.
Understand the processor’s security by reading reviews from current users or researching its compliance certifications.
This will help ensure that customers’ information and company funds remain protected from cybercrime or data breaches during transactions.
Additionally, many providers offer two-factor authentication, which provides an extra layer of protection for merchants and customers. This additional measure helps verify identities, reducing fraud risks even more significantly than traditional methods.
Von Payments Is Here for Your High-Risk Payment Processing Needs
Many factors can contribute to a business being classified as a “high-risk” merchant. And while this can make it harder to find reliable payment processing solutions, there are options specifically designed for processing high-risk transactions.
Von Payments is experienced in providing specialized payment processing solutions and high-risk merchant services for small businesses and mid-sized high-risk companies.
Our payment solutions include high-risk merchant processing, chargeback management, extensive banking/BIN options, tailored solutions for client’s needs, and a world-class team of customer support representatives.
With fast and easy approvals and no requirement for processing history, we are here to help business owners hit the ground running.
Looking for a reliable payment processor for your high-risk business? Contact Von Payments today.