How to Tell Whether You Are a High Risk Merchant

Article by Pierre Zarokian.

Making the decision to open a business is exciting, but that excitement can quickly turn to groans and frowns if you suddenly find out you need high risk merchant accounts to manager your payments. High risk sounds really scary, but the concept of risk is very simple in a financial sense. This guide will walk you through how to audit yourself, so you’re not surprised hunting for merchant accounts.

Are You High Risk?

High risk credit card processing comes down to a few major factors that determine your rates:

What is your existing credit line, and how long have you been in business? These are basic risk factors and credit company takes into account.
Is your industry full of chargebacks? This one can be tough to judge. You can talk to a representative from a payment gateway if you’re unsure, or do some research related to the general happiness of your target market.
Are you selling something considered illegal? If so, you should be prepared to carry the label of high risk. Payment processing companies can’t accurately gauge how long you’ll be allowed to sell what you’re selling.
What are your marketing tactics? Like a business loan, credit card companies are going to want to learn more about you. If you’re using poor business practices and scamming customers, you’ll find yourself a high risk account or you may be denied entirely.

What to Do

If you’re considered high risk, it’s not the end of the world. Some companies specialize in high risk, and offer competitive rates. While markedly higher than the average merchant account, you’ll pay less than if you didn’t shop around at all. Sometimes, all you need is a bit of time to grow and show you pay your bills on time. The world of merchant payments is full of people ditching their bills, so merchant account providers tend to judge first and ask questions later. Patience, and fiscal responsibility, will prevail in the end.