How to Avoid a High-Risk Merchant Account?
When you are signing up for a merchant account, you need to mention the average transaction and an estimated monthly volume. A high-risk merchant account will completely differ from a traditional account. The numbers which you mentioned is for your actual processing reference.There are two ways to exceed these limits
- If you do a large transaction at a time.
- Second is your monthly volume gets exceeded.
What is a High-Risk merchant account?
Each merchant processing company will calculate risks differently. To consider your business under a high-risk category different criterion will play a significant role.
In general, the risk is calculated in terms of fraud and chargebacks. More chargebacks will tend to be more risk.
High-Risk credit card processing is just like fraud and chargeback on a transaction that a business process. As we already said each merchant processing companies will have a different style in handling high-risk merchants. If you process a large transaction or you exceed your monthly limit, you will be labelled under high-risk merchant account. If any batch out goes higher on a single day than a mentioned amount, it will be manually checked and move that account to High-risk category.
Following factors will have to be kept in mind if you come under the high-risk category
- Monthly Business Banking Balance
- Your Business’ Credit Score
- Your Business’ Processing History
- Recurring Billing- if your business allows recurring billing then you must be subjected to high chargebacks.
- Your Industry and Transaction Method
- Reason for Increase
In most of the cases, merchant holds more chargebacks which will have resulted in them into the high-risk merchant account.
For example, if your business has a minimum sales volume, make it round for higher processing rates in exchange for a minimum account fee. If you have a large sales volume, argue for lower processing rates in exchange for a higher account fee. This way you can confirm that your business is set up for success from the beginning, as it’s much harder to re-settle further down the road.
Another way to mitigate your processing costs is to ask for an interchange-plus pricing plan. Interchange-plus rates are tougher ones, but also tend to be lower than the far more common tiered rates. Unfortunately, making a merchant account provider agree to give you an interchange-plus rate can be difficult. But it’s still worth a shot.
How Chargebacks and High-Risk account are inter-related
A chargeback is one of the important things to consider for categorizing merchant account under High-Risk. Each merchant processing companies will have a chargeback monitoring program. With that program, they will categorize the high-risk merchants who hold more chargebacks. An individual chargeback fee for a high-risk merchant is generally higher than the other merchants. While high-risk merchants should elevate their risk levels. They must also maintain their chargebacks effectively. However, by reducing your chargeback it is possible to reduce your risk level.
Merchant Industry is a renowned credit card processing company in New York. It offers you a customized solution that must be able to accept challenges that vests with high-risk merchant account.
The process of setting up a high-risk merchant account is certainly a bumpy road. But if you follow these steps, you will be able to design the perfect solution to carry your business to profit.
Ready to get started? The beginning of your journey is just a click away.