You’ve started a business, gotten all the right paperwork, invested in marketing and branding, creating a website, and are now ready to start selling your product to clients. You go to the bank to get a merchant account for payment processing just to find out that your business of choice is considered a “high risk payment processor” and they won’t allow you to be set up to take credit card payments. Now what?
Over the past 2 years, more and more businesses have changed how they conduct business, many now converting to online methods instead of the traditional brick and mortar methods of the past. In this post COVID era that we live in, cash itself is becoming increasingly obsolete. Taking credit cards from customers is no longer an option, but is now essential for businesses to survive. Where do you turn when banks start to classify more businesses as “high risk payment processor”?
What is a high risk merchant account?
A merchant account allows businesses to take credit card payments from their customers. Due to the growing level of credit card fraud, and the financial loss that it creates, banks are doing what they can to minimize their exposure by assigning businesses certain levels, or categories, of risk.
Finding banks that specialize in these higher-risk categories, becomes the key. Payment processors often create relationships with banks based on industry preferences, such as tobacco shops, firearms, CBD, etc.
What makes a business or industry “high risk”?
The scary part is, that there is no right or wrong answer to this question. Every payment processor will have different parameters for assigning risk levels to these various industries. Some banks avoid certain industries such as tobacco shops, firearm sales, CBD, etc. Banks might also have concerns with businesses that are selling internationally or putting their clients on subscription-based payment plans.
The key to getting through this “red tape” is by building a relationship with a payment processor that works with a variety of banking partners and industries. So, their job is to navigate you to the correct bank that knows how to properly set up your business.
Find a high risk payment processor
One of the best ways to find out what high risk payment processor will work for your business is to ask others in your industry who they use. This gives you an idea of which companies might already specialize in the industry in which you conduct business. The payment processor must understand how your business works to set you up properly and minimize any hiccups you may have taking payments from your customers.
Get to know the company. Many high risk processors do not actively post their rates and fees because these can change based on how you conduct business. They must understand how you operate, set you up correctly, and minimize your processing costs. Schedule a time with them and discuss the needs of your business openly and honestly. It is their job to match you with the bank that works best for your business and industry needs.
Don’t limit your options
While you may like one company and you are ready to move forward, you may want to consider getting more than one processor. You may have heard many horror stories about processors placing funds or accounts on hold for some time, and often without notice. Having a backup processor allows your business to continue running smoothly while you sort out the back-end needs. Owning and operating a business has enough stressors to worry about. Getting paid by your customers should NOT be one of them. Be proactive and make sure you protect the cash flow of your business through a proper high risk payment processor.
Conclusion: High Risk Payment Processor
Owning and operating a business has enough stressors to worry about. Therefore getting paid by your customers should NOT be one of them. Be proactive and make sure you protect the cash flow of your business through a proper high risk payment processor. For more information contact 5 Star Processing today!