A business is considered a high risk when the chance of chargebacks, fraud, and other problems is perceived to be higher than normal. This could be because of the industry that the business is operating in, or it could be because of the way that payments are accepted. The history of an individual or business might also cause traditional merchant processors to decline requests for processing services. Fortunately, there are options available when it comes to high risk merchant processing.
One option that is successful for certain types of businesses is to work with existing processing companies in order to reduce the amount of risk that is involved. This is not always practical because some banks and processors are unwilling to work with companies that are in certain industries. Reducing risk normally means that a business would institute stricter payment requirements from customers including options such as address verification, use of card code verification (CCV) numbers and selective blocking based on Internet domains when running an e-commerce website. Not all of these options will work with all business models.
A very popular option for high risk merchant processing is to seek out institutions that accept high risk businesses. These are specialty processors that frequently work with offshore banks in order to provide services that are not available in certain countries. This can work well and will provide businesses with a payment gateway or point of sale terminal that can be used to process orders. Most of these companies even provide payment card industry (PCI) compliant interfaces. The primary drawback of high risk merchant processing is that the fees that are charged are higher than normal. This is done to compensate for the increased amount of risk and administrative work that is involved. The extra fees can take the form of large initial setup charges and higher processing deductions on each transaction.
There might be situations where a business is completely unable to find any type high risk merchant processing. This situation can be remedied so that high risk processors will start to work with the business. The process does take time. A business in this situation needs to build a history that shows a low amount of risk so that processors are less hesitant. This normally involves accepting alternate payment methods for products and services. Each transaction should be documented and accurate records kept. After a certain period of time this will show high risk merchant e-check processing services that the business is stable and trustworthy.