There are a lot of businesses out there that might not realize they are in need of a high risk merchant services provider. When business owners hear “high risk” they tend to think of shady storefronts tor gray market businesses. But if your business is, say, a car dealership or one that’s dependent on a subscription-based service, it’s considered high risk, too.
Another reason business owners don’t believe they need a high risk merchant account for e-transactions, whether card present or online an e-commerce site, is because their current setup appears to be less expensive as well. While we don’t want to be the ones to burst your bubble, without e-transactions as a payment option you’re losing out on thousands of dollars in potential sales.
A recent study shows that Canada, one of the countries closest to becoming a cashless nation, consistently completes 42% of all transactions via credit cards. Another 28% of transactions in Canada were completed via debit cards. You need to determine if your business is high risk, otherwise you risk missing out on 70% of customers who prefer plastic over cash!
Does Your Business Make Low Gross Profit?
Car dealerships are often mistakenly considered to be businesses that are guaranteed high profits. Their merchandise after all is one of the biggest purchases a person can make next to real estate (which coincidentally, is also a risky business). But car dealerships often have a much lower profit margin, because the gross profit on a single vehicle sale is in the ballpark or $1000-$3,000 at most.
When you’re looking to set up a merchant account, that means that you might be signing on for more overhead that you can’t balance with your revenue. There are some merchant providers out there that purposely overcrowd their monthly statements to confuse business owners and sneak in extra fees. You need to look specifically for a high risk merchant services provider, because they are the ones who know what your unique concerns are.
When you shop for a high risk merchant services provider, you need to make sure you ask them a number of questions to determine their reliability.
Is Your Business Turned Away by Banks and Traditional Providers?
If you are high risk, no matter if you are selling nutraceuticals online or you’re an airline business, you’ll find that it’s trickier to land a deal with banks or more conservative-minded providers. Sometimes high risk is more about whether you’re a reputational risk for a merchant services provider, which is a shame, because there are a lot of high risk businesses that aren’t looking to swindle their customers.
A high risk merchant services provider understands the struggle business owners go through trying to secure a merchant account. Not all high risk businesses are liable to data theft, poor financials and general unsustainability. They’ll work with your circumstances and customize a solution that benefits both parties.
Does Your Business Get Hit with A lot of Chargebacks?
Another reason you might need a reliable high risk provider is because you are a business that has a high probability of experiencing a lot of chargebacks during the year. Whenever you’re hit with a chargeback, this presents both a reputational risk for banks and providers and affects your account negatively.
When chargebacks occur, a customer’s card provider will investigate the transaction for suspicious activity. During this investigation the amount of the purchase will be auto-debited from a business’ acocunt until further notice. Depending on the state of your finanacials the month it happens, it could lead to you being over-drafted and having to default on monthly payments.
Reliable high risk merchant services providers have all-inclusive pricing plans that offer free chargeback protection up to $1,000 per year. You need a provider that has your best interests in mind.