There are a few different ways that a business could be classified as high risk, but it doesn’t always have to be a bad thing. Today’s post will work through why your business may be labeled in the high-risk category, what you can do to prevent an unnecessary high risk rating, and best of all—how you can benefit from being a high-risk merchant. Believe it or not, there are some serious benefits that you gain when you do away with the restrictions a low-risk business operates under.
What does a high-risk business rating really mean?
As far as the credit card processing industry is concerned, high-risk merchants have a higher level of managed risk, so they often need specialized attention to help set up their payment processing account as well as keep it running while taking into account the increased risk.
That being said, high-risk businesses still need to find a service that equips their non-traditional business model without adding excessive costs or slowing down service.
Risk of Fraud and Chargebacks Increase
In a nutshell, a high-risk merchant account has a higher potential for fraud or elevated level of chargeback risk than a traditional retail business. One of the ways your transaction rates will be determined is by taking into account the average amount of each sale you process.
While higher ticket items may mean more opportunity for profit,...
For credit card processing companies, merchants that have a higher level of risk will need to be set up with service that is capable of meeting the needs of their specific business model. If you’re classified as a high risk business, you’ll want to find a company that doesn’t charge you excessive costs—or stick you with slower transaction rates.
How does a business get classified as a high risk merchant account?
A high risk merchant account will typically be classified as such because the particular industry has a greater risk of fraud and chargebacks compared to a more traditional retail merchant. If you’re in an industry that deals with international merchants or your business deals in legal or morally ambiguous trades, you may be categorized as high risk as well.
While certainly not an exhaustive list, here are several examples of high risk merchants:
Automotive Brokers
Amazon / Yahoo / Google Stores
Airlines
Adult Industries
Chat Sites
Casino and Gaming
Payday Loans and Cash Advance
Fantasy Sports Websites
Financial Consulting
Federal Firearms Licenses Dealers
Investment Firms
Life Coaching
Lotteries
Travel
Web Hosting
International Business
Extended Warranty
E-Commerce
You may have found trouble initially finding approval for credit card processing, but there are many companies that specialize in the unique needs...
