Credit Card Processing

In today’s financial climate consumers have mixed feelings about credit and debit cards.

On the one hand, they love the convenience of not worrying about having enough cash on hand, and the fact that card statements and access to online banking makes it easier for them to track expenses.

On the other hand, with data breaches and identity theft becoming more prevalent, some consumers are giving up their cards in favor of a cash-only existence.

To remain competitive in the marketplace, vendors need to be able to cater to both types of consumers. If not, they could find themselves losing out to vendors that offer credit card processing.

Unfortunately, it is almost impossible for high-risk businesses to get the merchant accounts they need to enable credit card processing.

High-Risk Businesses

A business is considered high-risk if it meets one or both of the following criteria:

  • It’s part of an industry with high health and safety risks, such as construction; or,
  • It’s part of an industry with high financial risk, such as a pawn shop.

Businesses in industries that are considered high-risk tend to have a high level of credit card chargebacks, refunds and returns, and credit card fraud. They may also have extremely high expenses, from fatal and non-fatal accidents, that cut into their finances and damage their credit rating.

Businesses that are considered high-risk could be forced to pay higher interest rates and fees than other companies, and may even be prohibited from getting a merchant account.

However, there are some ways that a business may still be able to qualify for an account.

Compliance Requirements

Businesses that have a high physical risk can submit documentation proving that they are compliant with Occupational Safety & Health Administration standards and regulations, as well as any local, state, and federal laws and regulations. The business may also be required to submit financial information.

If the business can prove that they are compliant, and that they are financially stable, they may qualify for a merchant account, and credit card processing, albeit at a higher rate.

High-Risk Merchant Accounts

Companies like Highriskpay.com offer high-risk businesses the opportunity to open merchant accounts without the extra fees or the hassle they might encounter from traditional banks.

These companies specialize in working with high-risk businesses and can often set them up to accept credit cards within a very short time – sometimes as little as 24 hours. They may also provide merchant accounts to companies with bad credit, or companies located outside the US who would like to do accept credit cards from the States.

In Summary

  • Although some consumers are making the shift back to cash, there are many more that still prefer the convenience of credit and debit cards;
  • To remain competitive, businesses need to include credit cards as a payment method;
  • If a business is part of an high-risk industry, it might have difficulty opening a merchant account through normal channels;
  • Payment processors that specialize in high-risk accounts can help these businesses get the credit card processing they need without providing compliance documentation, or paying outrageous fees.

Featured image credit: Credit Cards/ShutterStock

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