The term “high-risk merchant account” refers to a payment processing service for enterprises that banks consider to be extremely risky than standard accounts due to the very high quantity of chargebacks, financial insecurity, a history of fraud, a poor credit rating, or other factors. Due to the obvious aforementioned risk concerns, high-risk firms are typically forced to pay higher fees and undergo further inspection in order to get merchant services which is why choosing a reputable payment processor such as TailoredPay high-risk merchant account is essential in helping your business to continue growing.

If a high-risk firm’s history reveals a high number of refunds and chargebacks, a merchant bank may place a rolling reserve – the amount of money set aside to cover the likelihood of a chargeback – on the account of that business.


Is it necessary for me to have a high-risk merchant account?

The risk that your business poses to the bank or financial institution that will be working with you and supplying you with a merchant account will be evaluated whenever you apply for a merchant account.

High-risk enterprises may be found in a wide variety of industries, including charity, travel and tourism, tattoo shops, adult entertainment, insurance firms, and affiliate marketing, to name a few examples.

If you work in a ‘high-risk’ industry (which we outline at the conclusion of this post) or have been turned down by a bank in the past, a high-risk merchant account will allow you to continue doing business as normal.


What Factors Should I Consider When Choosing A High-Risk Merchant Account?

Prior to selecting a high-risk merchant account provider as your future business partner(s), you must consider the following considerations to ensure an educated choice.

  • Do they collaborate with other retailers in your field?

Selecting a supplier who is experienced with your sector provides a number of benefits. For starters, they will have a better grasp of how normal transactions work and may even be better positioned to spot fraudulent conduct.

  • Do they provide telephone customer service?

If you work in a high-risk sector, you are likely to meet additional payment challenges. Having a customer service telephone number or live chat available will be far superior to relying on somebody to respond to emails or support tickets.

  • How much do they charge in total (monthly cost, transaction fee, and discount rate used)?

Certain providers offer hefty monthly costs yet charge little in terms of transactions, while others do the opposite. When comparing high-risk merchant account providers, it’s critical to obtain all pertinent charge information and then use your usual transaction volume to determine your business’s monthly cost.

  • If you exclusively accept purchases online, are they payment gateway specialists?

Due to the numerous sorts of fraud that may occur with online payments, it is definitely worth choosing a merchant account provider with expertise in accepting online credit card payments for high-risk merchant solutions. They are more than likely to employ a more secure payment gateway and will have procedures in place to minimize fraud and chargebacks.

  • Are their security precautions rigorous and dependable?

Your prospective payment partner should adhere to stringent data security standards and industry best practices. For instance, they should be equipped with anti-fraud capabilities and a chargeback prevention system to safeguard your organization against fraudulent users. Additionally, data encryption, firewalls, and other industry-standard security procedures are required.

  • How customizable are their services and how adaptable are they?

You must ensure that your merchant account provider is capable of tailoring their prices, goods, services, and features to your business’s requirements, present condition, and aspirations because this is critical if your business model is highly complex.

  • Are their costs and contracts transparent and easy to comprehend?

All fees and any additional expenses should be clearly stated on their website or in their customized quote. The contract’s fine print should not be glossed over, with special attention devoted to any potential hidden costs, the length of the contract, the notice period, and termination fees.

  • Is their website regularly up to date?

While we’re on the subject of the provider’s website, the entire package should be maintained updated: basic information about recent events and the current calendar year in the website’s footer. This is an indication of a firm that is still operating efficiently and adapting to changing market conditions and business requirements.

When applying for a high-risk account, what can I do to improve my chances of being accepted?

Apart from merely submitting an application for a high-risk merchant account, there are a number of actions you can do to optimize your application and improve your chances of being approved.

  • Maintain the accuracy of your financial records.

Keeping your financial records up to date will go a long way toward demonstrating your current financial standing.

  • You should increase your credit rating by a few points

In spite of the fact that high-risk merchant accounts are designed to accommodate customers with a bad credit rating, it is still advisable to take action to enhance your credit rating before applying. This may entail avoiding any late payments as well as completing any overdue premieres that have been scheduled.

  • Make certain that your terms and conditions are completely compliant.

Making certain that your terms and conditions are entirely compliant, and that you are operating within the legal framework of regulatory norms and constraints, will assist you in convincing providers that you will not cause problems down the road.

  • If you are employing third-party fulfillment, make certain that your contract shields you from liability

Orders and refunds made through a third-party fulfillment service might put your firm at greater risk of loss, thus be certain that your contract with them provides you with adequate protection in the event of a problem.

  • Obtain a number of quotations and conduct extensive research.

It is often advantageous to obtain a variety of quotations before entering into any commercial negotiations. Making contact with many providers and taking the time to read customer evaluations will ensure that you are completely educated and able to obtain the most appropriate high-risk merchant account for your business.

  • Chargebacks should be kept to a minimum.

Demonstrating that you can keep chargebacks to a bare minimum will increase your chances of being accepted. This may be accomplished by installing fraud filters, appropriately structuring statement descriptions, and establishing a quick and simple refund procedure, among other things.

  • Take into consideration offshore merchant accounts.

Expanding your pool of possible suppliers can not only boost your chances of being approved but may also result in more favorable conditions being offered to you.

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