Some online businesses are at a higher risk for chargebacks and other financial concerns than others, making it harder for them to get access to the merchant accounts they need for operation. The odds are you might fall under the high-risk category when serving your clients. You don’t have to worry about this concern, as you can use a high-risk merchant account for your ecommerce needs.
Why Would You Be High-Risk?
There are many good reasons why your business might be a high-risk entity:
- Your online nature could be a factor. Online transactions entail card-not-present or CNP processes, making it harder to confirm the identity of whoever is making a purchase. You will be subject to more online fraud attempts while online.
- You may deal with excess chargebacks. People may notice questionable statements on their credit card bills, or they may not receive the products or services you promise. They will demand reimbursement from the credit card companies, causing you to lose money in both a return and a chargeback fee.
- Return fraud is a problem many ecommerce businesses deal with, and this can result in extra chargebacks. Customers can claim they never received their items, or they may return stolen items and claim they want a refund for the purchase. Return fraud is easier to commit online at physical stores.
- Some ecommerce sites may also be in high-risk industries. These include the travel and hospitality industry, the online software sales industry, and even fields dealing with regulated products like alcohol or tobacco. These fields are subject to people requesting refunds after their purchases or from questions surrounding the legality of what they are ordering.
All of these concerns can make a retailer riskier to support. You could even be listed as high-risk if your business has a positive credit rating and has received no complaints from your customers.
You don’t have to worry about whether you can get a merchant account, as high-risk accounts are available to businesses that qualify. You can use an account that will help you accept credit card payments with ease.
Support For Your Platform
A high-risk merchant account will integrate with your current ecommerce platform. You can hire a high-risk account that can work with your POS setup, including the digital shopping cart system you utilize. Many accounts can also link with a QuickBooks database for easy accounting work.
The system should also support all major network brands and setups. It can manage PCI standards to ensure you’re securing the right pieces of credit card data without risking losing anything in the process.
Protective Measures Are Necessary
A high-risk account should include the proper protective systems to prevent future chargebacks and other issues. A merchant account can assist you in planning various security measures that will fit your business’ line of work:
- Fraud protection systems can help, including setups that filter transactions based on their IP addresses and other details.
- Address verification support may also be available through some accounts. The verification system will compare the card’s address with the address one is shipping an item.
- A system can also help you prepare a thorough customer service department, return policy, and other factors to inform customers about what they are purchasing from you. Your customers will be less likely to produce chargebacks if they know they can contact you if they have concerns.
Your high-risk account will provide all the help you need in protecting your customers and your bottom line. You’ll have more control over how you handle everyone’s funds, plus customers will feel confident in your ability to manage whatever unique needs they may hold.
Rolling Reserves Work
One thing you will notice in a high-risk merchant account entails the rolling reserve you will handle. The rolling reserve is a monetary reserve you will keep with the processor. The processor will hold onto the money for a determined bit of time and then give you the money afterward. The reserve is held as protection from possible chargebacks or other financial issues you may experience.
The amount of your rolling reserve will vary. Your chargeback history and your ongoing financial status could be factors in determining what you will get out of something. But a merchant service provider can help you negotiate a plan that keeps your rolling reserve value down, ensuring you’ll have more money for your business.
Watch For Charges
All merchant service providers will impose charges for each business. The same is true for high-risk merchants. But some providers might add extra fees to high-risk businesses to offset the risk. These include higher cancellation fees or elevated chargeback rates. Sometimes the merchant fees for each transaction may increase in value. Given how high the interchange rates with various credit card networks already are, the last thing you’d want is to bear with higher merchant fees on top of those rates.
What About Contracts?
The contract terms for working with a merchant service provider will vary surrounding whatever you’re managing at any moment. Some high-risk providers will require you to stick with a long-term contract that could last for a few years. The timeframe will vary surrounding the terms and how you’re getting something to work for your needs.
Some deals may be shorter, as some providers can offer deals that work by the month. These include efforts that don’t require long-term contracts for service. You could pay for the work by the month and leave at any point. Some companies will also offer gateways without having you lease anything. Don’t forget about the free equipment that you can get from some providers, although you might have to return that equipment after you finish using it for your work plans.
You can talk with your merchant service provider to see what you’ll get out of a high-risk account. A high-risk merchant account will help your ecommerce business grow and process credit card payments in moments. It should be planned with care and with your budget in mind. The best work will ensure you have a plan for accepting payments your customers can trust.