Has your business been classified as “high risk” by merchant services providers? If this has happened to you, then it might be hard for you to understand, especially if it is causing you to be turned down for a merchant account. There are a few reasons that banks will consider an industry to have a higher risk:
Most or All Payments are Processed Online
Online transactions have a higher rate of dispute or chargebacks than traditional brick-and-mortar retailers. Because the transaction was not done in person, it is easier for the customer to dispute authorization. Therefore, if your company conducts most of its business online, a domestic bank will be hesitant to approve your account.
High Transaction Volumes are Common
This is one of the most puzzling factors to business owners. Most feel that if they have a high volume of sales that they will be attractive to a bank. However, the banks usually don’t see it that way. High volume raises suspicion of fraud, and banks will either turn down the account or set a volume cap that will restrict the amount of business you can transact.
The Nature of the Industry is Controversial
Some industries are just controversial in nature, and banks choose not to open merchant accounts. Because of the controversy, they feel that chargebacks are more likely to occur. Gaming websites, adult entertainment businesses, and sports forecasting services are just a few examples.
There is a High Rate of Fraud
If the industry in which you conduct business has a higher rate of fraud than most, a bank will classify your account as high risk. In this case, the honest businesses are penalized for those who have been dishonest. The multi-level marketing industry is a good example. There are many MLM companies that have a great reputation for high-quality products. However, because MLM has been used in several fraudulent schemes, the entire industry has to deal with the cost of high-risk.
A Solution for High Risk Merchants
If you are in a high risk business, your situation is not hopeless. You can get approval to process credit cards at very competitive rates. CDKPay specializes in helping high-risk merchants find reliable, affordable credit card processing solutions. We can simplify your application process and help you to get fast approval on your merchant account.
CDKPay is experienced in helping businesses find the right merchant account for your business model.