Well, in these days choosing a financial solution for a normal business has become quite a difficult task. When it comes to high-risk business, the task becomes even more critical and nearly impossible even to secure a merchant account. This is because of the high-risk factors like legal proceeding, proper license for the business, legality status of the business in various countries, etc. involved in the business.
High-Risk Merchant Accounts:
A merchant account is a kind of account, approved by a bank or financial establishment that makes it possible for the business owners to accept credit or debit card payments for their business from their customers. It is quite difficult to obtain this sort of high-risk merchant account on our own. There are a lot of papers and documents that are required to be submitted. Hence it is sensible to opt to go for a professional company like Highrisk Solutions Merchant Accounts that are tailored to meet business needs of clients.
Why Are They Considered As High-Risk Merchant Accounts?
Taking a loss on your account, if you are unable to support the sales volume that you are applying for due to some personal credit or company’s financial problems they will have to bear the loss on your account. This is the worst scenario and considered to be a very high-risk factor.
The longer liability period for chargeback you offer for your service or product the lesser they will consider approving your account. In cases of industries which are known for its high chargebacks, the banks will decide to turn you off. This is because they will have to spend way too many resources to manage your account.
Reputational risk, this is if you are particularly in the adult industry like selling of adult products or services involving adult contents. The banks will think about the reputational status of both your business as well as their banks.
Read More: High risk merchant account factors
Things To Take Into Consideration For Obtaining A Merchant Account:
Be very clear with your policies; you should be very clear about your terms and conditions to keep away from any potential chargebacks. Your websites must very clearly display your policies, and even in your purchase mails, your policies must be displayed.
Deal negative feedback appropriately, with the help of proper customer service turn negative feedbacks into customer service changes. For any business irrespective of the risk factor, negative feedback will only pave the way for your merchant account provider to turn your claim down.
Try to minimize your chargebacks, one more additional benefits of having a good customer service is it will result in cutting down of the chargebacks. For certain industries, the history of chargebacks will be the only factor holding back the merchant account providers from providing you a merchant account.
Stay above the law, make sure your business is well within the law and it abides by the rules and regulations.
How To Self Assess Your Status?
Before you apply for any financial service, it would always help to ascertain if you are a high-risk merchant. Here are a few evaluation tips that will help you to check if you are in the category of high-risk merchant. These are the criteria which form the broad basis on which you will be assessed.
#1 Your Credit History – This will give insights into the manner in which you manage your finances. Many service providers will still go ahead and offer you services despite your status. However, your credit history will be evaluated and assessed to check your defaulter status.
#2 Company’s Finances – This will give a proper assessment of the financial health of your company. Your ability to generate funds and the revenue streams and models are metrics used by service providers to assess if a company has had a history of being in the red always.
#3 Years In Business – This indicates your intention to remain in business. A company that has been in business for a very short time will have a lower score because poor financial health plus a shorter period of presence will be considered as risky on a comparative scale.
#4 Nature Of Business – For a service provider with enough information on the revenue models of different businesses, the nature of business offers a wealth of information. For instance, if a particular type of business fetches good return on investments, your company will be assessed against the average benchmark of performance to understand if your business is below par.
#5 Account History Of Merchant – The account history of merchants will help the service provider to understand more about the chargebacks and also to check if the merchant has been blacklisted at any point in time. This reflects in the merchant history and is used to assess merchants.