High-risk merchants are often classified as such for different reasons. A common basis is usually poor credit rating. In business, credit rating is based on the ability to pay back and dictated by the willingness of the merchant to honor obligations. A merchant who honors obligations on time and keeps the lender engaged throughout will have a higher credit rating compared one who fails to pay installments as agreed. Credit rating is therefore very important for lenders.
Some businesses are naturally high-risk
Unfortunately, there are some business categories that are considered naturally high-risk. An excellent example is a website that provides adult entertainment services. It isn’t uncommon for a frequent user of such a website to deny any association with the website when it comes to card processing. Since most people don’t reveal their true identities on such websites, it becomes very difficult to authenticate any claims for service fees. This makes such kinds of ventures very risky.
Quick facts about high-risk merchant processing
1.What is a high-risk merchant account?
A high-risk merchant account is an account for credit card processing which has been classified as high-risk by banks. This can be due to your industry and the amount of chargebacks you get over the normal cause of business.
2.Why was my account classified as high risk?
An account can be classified as high risk for many reasons. The business might be very new to the industry with no history of previous card processing. It could be low credit score. Or you could be competing in a very new or unproven industry, to name just a few.
3.What can I do if my business is classified as high risk?
Find a high risk processing merchant such as Painless Processing. These merchants specialize in high risk processing accounts and will help you get a long term payment processing solution.
4.What do I need to get a high risk processing account?
Most merchants require a clear copy of your ID, voided check, marketing materials, and your website. A few merchants may demand articles of incorporation and checkbook statements. For existing merchants, you may also need copies of current processing statements and financial/tax returns.
5.How much does high risk processing cost?
The costs can vary widely. You can pay as much as 4.99% for onshore processes and up to 9% for offshore processes. Fortunately, Painless Processing offers very competitive rates.
6.What is a rolling reserve and who needs it?
A rolling reserve is usually assigned to the highest risk merchants. A percentage (typically 5-20%) is taken off each transaction and placed in a non-interest bearing account for 6 months. From the 7th month onwards, the merchant receives the payments for the 1st to the 6th months, rolling forward.
7.How do I apply for a high risk processing merchant account?
It is simple. Just fill out our application form and wait for a response within one (1) business day. You can also call Painless Processing at 877 996 2795 to speak to a representative.