Merchant Accounts for high risk clients including casinos, pharmacies, and travel agencies.
Merchant Services for High Risk Businesses.
You may not know this, but many businesses online are considered high risk through no fault of their own. For instance, travel agencies have a high rate of credit card chargebacks, so they get lumped in the same risk category with adult and gambling websites. Nonetheless, if you want to make money online, or offline with credit card terminals, you need to get an account that allows you to process credit card transactions and collect payments from customers. This is where the high risk merchant account becomes a valuable resource. Now, it is possible to accept credit cards whether you are a new business or one that has been established.
Avoiding chargebacks is one way to prevent being labeled as high risk by your merchant services provider. In many cases this means that you may need to absorb costs like restocking fees and return shipping charges, even when the fault is clearly on the side of the customer. Chargebacks can be known as “friendly fraud” since many people will claim they never received a product, or had a problem with a service, when in fact they got exactly what they wanted with no problems. Aside from the cost of the chargeback, you end up having issues with your merchant account, and may pay higher credit card processing fees. There are even some cases where people lose their merchant account provider and have to switch to third party merchant services providers or get a high risk merchant account processor and pay high fees for credit card processing. If you have been paying for a high risk merchant account, and have a good history with few chargebacks, you may be able to qualify for better merchant account rates.
Are you in a high risk merchant account even though you’re a low risk business? If you got your merchant account a few years ago when your business had more chargebacks or a higher credit risk, you may have had to opt for high credit card processing fees associated with high risk merchants. High risk account types typically include offshore, pharmaceutical, and mature audiences services where there is a much higher chance that the customer will use a stolen credit card or charge back. Some fields that may not seem “high risk” off the bat include companies like water filtration system sellers or travel agencies, but the nature of these business types is either associated with more chargebacks (buyer’s remorse or anger over an overpriced water system) or fraud (vacations charged to a stolen credit card.) If you are lumped into the same category as these merchants, you may find yourself paying rates as high as 11% for the privilege of processing credit cards.
Notes and Special Information
Special note: You can also be considered high risk if you have a substantial number of chargebacks associated with your business. In order to prevent high risk merchant fees, you should make sure that your customer service can handle complaints, and that you are not antagonizing customers when they are looking to get a refund. The cost of a chargeback includes the item price, a fee from the credit card company, and a black mark against your merchant account report, all of which can put you into a category where you will pay very high rates for credit card processing, which in turn can make your margins unsustainable. If you are sitting in a high risk account that should be low-risk, then you should consider changing merchant account servicers.