Want to open a high risk merchant account but are confused about how to open it? You will know everything about it in this blog. A high-risk merchant account is the account given to the business that the payment processor deems to be at greater risk of fraud and chargeback.
What Is The High-Risk Merchant Account?
It is the payment processing account for the businesses considered to be of high risk to the banks. As high-risk trades are more cause to chargeback, they come with the requirement for paying fees for services of the merchant. In case a business with the high potential of chargeback comes. Then, the bank may put a rolling reserve on your account. It is the amount of money that will cover the chance of the chargebacks or the fraud. Next, you should know the main differences between the high-risk and low-risk merchant accounts.
What Is The Difference- Low Risk Vs. High-Risk
Before you apply for the merchant account, it will be very important for you to know the differences between the high and low-risk merchant account. The following are some differences between low and high-risk merchant account that you should know:
Low-Risk Merchant Account
- Credit card transaction that is less than average of $500
- Minimized Returns
- Less than $20000 processed monthly
- Zero to low chargeback ratio
- The industry in which merchants operates is considered low risk
(These are, for instance, low-risk shoes and clothes, baby products, household goods.
High-Risk Merchant Account
- More than $20,000 monthly sales value
- Credit transactions are higher than the average $500
- A business sells products and services to nations that are known for high levels of fraud
- Bad credit history and excessive chargeback
These are the separations between the low-risk and the high-risk merchant account.
How Can I Apply For Merchant Account?
In order to apply, you need to fill out an application online to get a merchant account of high-risk. Moreover, to accept the card payments, you also need to find an accurate high-risk payment processor like 5-Star processing. The process is so simple for applying for a high-risk merchant account.
For example, if you choose 5-star processing as your payment partner, we will help you to find a bank that matches your business requirements. In case your business is approved by the acquiring bank. Then, you can start processing payments online or on mobile.
What To Know When Applying For Merchant Account?
There are so many high-risk credit processors on the market. However, 5 star processing is unique from other ones. 5 star processing is an independent payment processing company that has its own qualities. There are many things that you can consider when looking for a merchant account of high-risk with 5 star processing. The following are some important things about which you should know:
You need someone to ready to help you when anything bad happens to payments on your website. Thus, to solve this problem, at 5-star processing, we will give your high-risk business a guarantee that every issue will be addressed.
Flexibility And Customization:
At 5 star processing, we let you implement many payment scenarios that fulfill all your business requirements specifically when you run a complex business model. Make sure you can customize each and every element of the payment form. Moreover, you can discuss the rates, conditions, and features fulfilled to your business.
The structure of pricing should be easily found on the website of 5 star processing. You need to search for accurate information about the fees and the potential added costs. Make sure that there are no hidden or additional fees. These are the three important things that you need to consider when looking for a merchant account of high risk.
What Are The Pros Of The Merchant Account?
Given below are some benefits about which you should surely know:
- Expanding Your Business
- Increased Profits
- High Chargeback Protection
Expanding Your Business:
You can sell goods or services with the assistance of a high-risk merchant account that is not enabled when you have a low-risk merchant account. Hence, it gives you more chances for long-term growth.
With the wider chances of the products, you can sell grow your chances of them earning more money.
High Chargeback Protection:
This means that you have a bigger chance of keeping your high-risk merchant account in the good shape.
For example, when a merchant crosses the chargeback threshold with a regular account, they may even end up with the ended amount. Moreover, they need to look for a high-risk merchant account. This often equals a pause in taking credit card payments. However, it is simple to keep your account in continuity, as a single chargeback exceeding does not have come with the closing of an account. However, it also does not mean that you can ignore chargeback management.
Final Points To Remember:
Conclusively, applying for a high-risk merchant account with the help of 5-star processing is a good idea. You can get a lot of benefits by choosing 5 star processing that is an independent payment processor company. We have a lot of experience in providing payment services to the merchant account. Hence, it will beneficial for you if you take the help of 5 star processing and apply for a merchant account of high-risk.
A business is considered high risk due to several factors. However, most commonly, it is based on the two main conditions. It operates within the high-risk industry and the risk of financial failure exists. For small businesses, they may be considered high risk if they are processing revenue that is less than $1.2 million per year.
A chargeback is the reversal of funds after a customer has disputed a transaction with their bank. The concept of chargeback was created by the fair credit billing act. As time has progressed, chargeback has become more problematic for small businesses.
In my opinion, I accept low-risk businesses. I think low-risk businesses are the safest bet for enterprises. Many enterprises start small by offering services in their local community. These are safe business ideas because there is less competition and lower possibilities of failure.