Every business, in person or online, needs payment processing services. Card and mobile payments are critical to developing any kind of revenue stream. And for e-commerce sites, cash payments are not an option at all. Unfortunately, some merchants find themselves in a high-risk category, making fees higher or, in some cases, making it difficult to get a merchant services package at all.
While obtaining payment processing can be more difficult, though, it is not impossible. Businesses in this category need to work with sophisticated independent sales organizations able to provide high-risk merchant processing. Finding an ISO able to do so can help open up the revenue streams needed for a business to get off the ground.
A high-risk merchant can come into that status in many ways. One is simply a function of the nature of the business in question. Some businesses are associated with a higher risk of fraud or failure, including:
Because of the industry-wide difficulties, any business in these industries will be placed in the high-risk merchant processing category.
Beyond business category, a company can fall into the high-risk group based on initial capitalization, revenue concerns, previous fraud issues, lack of adequate risk management protocols, or even poor personal credit for the business owner.
Unfortunately, payment processing risk does not include a spectrum of categories; merchant accounts are either high risk or not. And regardless of how sound a business may become when it falls into the high-risk category, it will receive less favorable terms. Both the rates and the fees it is charged will be higher, and in some cases, it may mean getting merchant services at all becomes difficult. Not every ISO is prepared to take on riskier customers, and those that do may charge at very different levels to do so.
For businesses that need high-risk merchant processing services, shopping around becomes vital. They need to identify ISOs that are equipped to take on more risk, through economies of scale or insurance that absorbs some of those risks. Working with an established ISO that can take on the risks gives high-risk merchants the best opportunity to secure payment processing at the best rates they can achieve.
John is currently the Senior Vice President & Head of GlobalOnePay leading business development and partner teams. John has over over 20 years experience in the electronic payments industry, with roles including co-founding a successful businesses in the financial services and merchant acquiring space. John has held senior management positions with multiple top tier acquirers and was CEO/Co-founder of Base Commerce.