When to Seek a High Risk Merchant Account

In the complicated world of payment processing, some industries and types of businesses are considered “high risk.” While many businesses are considered “high risk,” some of the most common include the adult entertainment industry, medical marijuana stores, online dating or gaming communities, car dealerships, and e-cigarette companies.

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If your business has been deemed a high risk merchant, you’re likely having a hard time finding a company to provide you with the payment processing services you need so you can continue to serve your clients and grow your business.

Considering in 2015 only 25 percent of Canada’s transactions used cash, it might be time for you to seek out a high risk merchant account. Here’s how you know it’s time:

When You’re in a High Risk Industry

This is perhaps the easiest way to know whether it’s time to seek out a high risk merchant account. Why? Because if you’re a high risk merchant, you can reap the benefits and say farewell to the challenges of trying to work with traditional payment processors. 

Working within a high risk industry isn’t a bad thing. These industries are not the sketchy storefronts or illegal activity that stereotypes would have you assume. In fact, even car dealerships can be considered high risk.

Essentially, different payment processing companies have different ways of determining the level of risk associated with your business. Industries that are at risk of fraud or chargebacks and those that have lower profit margins are often the ones considered high risk.

For this reason, a high risk merchant account is your safest bet for success.

When You Can’t Strike a Deal with Traditional Providers

Whether you’re in the adult entertainment industry or own a car dealership, if you’re a high risk business, traditional payment processing companies are going to be a lot trickier to strike a deal with. Sometimes the reputation of an industry alone can have these providers closing their doors on you. While it is frustrating, that’s why a high risk payment processor is the best option and might be a blessing in disguise.

High risk merchant service providers know what you’re going through and know how to help your business. They’re not going to jump to conclusions. They won’t make any assumptions. They will work with your business to create a customized solution that’s safe and beneficial for everyone.

It may seem like working with a traditional provider is the best option; however, when you can’t strike a deal with them, it becomes clear a high risk merchant account is the right way to go. 

When You Encounter Many Chargebacks

Chargebacks can lead to your business being deemed high risk, so if you encounter a hefty number of them, a high risk service provider is definitely the right route for your business.

If a credit card is stolen, for example, the customer’s card provider will begin to investigate the transaction for any suspicious activity. This often leads to a chargeback that provides the customer with the amount of money that was used on the fraudulent purchase. However, for a business, this money is taken out of profits, even though the product or service was still provided.

If this situation happens frequently (which it often does in high risk industries), traditional providers will avoid working with you. When this happens to your business, you know it’s time to seek out a high risk merchant account.

Being a high risk merchant shouldn’t stop you from finding reliable payment processing that will help your business grow. Know what to look for and which questions to ask, and your search for a high risk merchant account will be a breeze.


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Lisa Gibson

Lisa is the Credit Manager of BNA Smart Payment Systems and has over 18 years of experience in diverse roles of credit and credit risk management. She graduated from the financial program at Boreal College and is an expert in personal loans and line of credit, mortgage underwriting, private label commercial credit cards, small business loans, and merchant account underwriting. Lisa is also an avid railfan and HO scale train modeler, and enjoys curling.

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