Any business that experiences a high number of chargebacks is deemed as a high-risk business. Some characteristics of a high-risk merchant are:

• Monthly sales volume is more than $20,000
• The amount of average credit card transactions is higher than $500
• Bad credit history and increased number of chargebacks
• Selling products and services to countries that have high levels of fraud

Why Do You Need a High-Risk Merchant Account? 

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High Rate of Chargebacks

If your company receives a lot of chargebacks, this is a warning sign for merchant account providers. Although this metric isn’t generally indicative of your business, it does provide information to the processor about your clientele’s patterns. If your clients have a considerable history of chargebacks, your company would most likely be classified as high risk, necessitating further chargeback security. The majority of low-risk companies have no chargebacks in a given month.

High Rate of Fraud

If your company processes a significant number of fraud transactions per month, it is another indicator that your company is at high risk. Using only a virtual terminal and conducting only card, not present transactions would necessitate a high-risk account in some instances.

Selling Products That Blur the Line Between Legal and Illegal

If your business includes the sale of goods that are associated with illegal activities, there are chances that you may need a high-risk merchant account provider. A high-risk merchant account could be your only choice for accepting credit cards if you sell items like drug paraphernalia or elements from the pornography industry.

Offshore Businesses

If your company is headquartered in another country but works in the United States, this is a huge warning sign for merchant account underwriters. In such a case there’s no way to tell if your business is entirely legitimate and trustworthy without being able to see and understand all of its inner workings. That’s enough to put the organization on the high-risk list.

Merchants Having Bad Credit

The credit score of the business owner is one of the deciding factors in approving any merchant account. If you have a bad credit score, it indicates how risky it is to sanction your company for a merchant account. Even a high-risk account may not be a choice if your credit score is incredibly low until you can lift it to a safe level. While getting a payment processor account with bad credit isn’t impossible, it can be challenging.

High Average Ticket

A high-risk merchant account is the need of the hour if your company has a very high average ticket. Consider a convenience store with an average ticket of $7: several chargebacks will be expected to equal the dollar amount of a single chargeback for an electronics store. If your average ticket is exceptionally high, this could be enough to place your company in the high-risk category.

Why Do You Need to Secure Your High-Risk Merchant Account?

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Chargebacks are a concern for any company that accepts credit card payments. So you need to secure your high-risk merchant account. Once you have got the approval of a high-risk merchant account, securing all the payment processing is very important.

Here are some tips that can help you to secure a high-risk merchant account.

Tips to Secure Your High-Risk Merchant Account

• You must keep a check on your monthly processing volumes. If, in any case, you are going to surpass the significant limitations of payment processing, make a call to the bank and inform them of the reason for it. For instance, you may be expanding your marketing campaigns or launching a new product.
• Keep your bank up to date about any changes in your business practices. Think of your high-risk merchant account bank as a valuable member of your team.
• Consider obtaining additional merchant accounts if you anticipate a significant increase in business.
• On the billing descriptor, include your customer support number right next to your company name. You want clients to call you first with questions, not with the issuing bank when viewing their credit card details.
• Make excellent customer service a priority. You can avoid chargebacks by providing prompt customer support. Additionally, it promotes customer loyalty.
• If you’re switching merchant account providers, gradually reduce processing volumes from your current account. When you close your account unexpectedly, the acquiring bank can become concerned and decide to freeze your funds or keep your reserves.
• If you have any average tickets that are significantly higher than usual, contact the bank and explain the situation. Banks despise being surprised.
• Make it easy for consumers to return goods if they are unhappy with them. In particular, it is easier to issue a refund than to fight a chargeback if you sell a lower ticket item.
• You must always review reports and reconcile the statements. Manage your account correctly.
• Secure yourself from fraud. Cybercriminals are always looking for an excuse to attack. Keep your company protected by implementing superior fraud protection.

Final Thoughts

While certain risk levels, fraud, chargeback, and scam are undoubtedly present in accepting cards, you can avoid certain risks by taking aid from a legitimate merchant service-providing company. Secure your high-risk business account now!