Banks normally classify certain businesses as high risk. Because of a greater likelihood of chargebacks, banks may choose to decline wide ranges of business models simply because the bank does not want to underwrite certain business types. It may be due to their nature ofbusiness, previous losses and external factors like changes in regulations or policies.
Due to the fact that a bank does not want to increase its contingent liabilities, banks may still classify a business as ahigh risk account,even if the business is highly successful and has a proven history of low chargeback. Leveraging on the law of supply and demand, some banks may accept high riskmerchant accounts and charge a higher rate.
Domestic High Risk Merchant Accounts
Acquiring a US merchant account is generally favorable for high risk businesses whose customer base is within the US. Settlement and approval time are much faster and rates are much lower than offshore payment processing.
International High Risk Processing
Businesses that have customers around the world prefer to offer their customers the ability to pay in their local currencies. With an offshore merchant account, these businesses can have payment processing with multi currency capabilities. Alternatively, companies would like to diversify processing among different jurisdictions to overcome redundancy and reinforce backup system, thus enabling effective international trading.
Alternative Payments for High Risk Merchants
Aside from accepting credit card payments, a business can increase sales by offering more payment options. Customers are more likely to proceed with their orders if provided more alternatives.Having more options also provides more credibility to your business.
For example, adding echecks to the checkout page can increase orders by up to 25% for companies with US customers. Echecks makes it easy for customers who have no access to credit cards, or simply prefer to pay with a direct debit from a bank account.
Local bank transfer is also a great alternative payment option for businesses with international customers.
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