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What To Do When Your Business Is Labeled High-Risk

High-risk merchants don’t have it easy. It’s much more complicated to get the same business resources that low-risk merchants get, making it difficult to seamlessly run a company. Often, business owners don’t fully understand why their business is being labeled as high risk, or what this label even means for the overall success of the company.

During this time, it’s important to understand that there are ways of combating this “high risk” association and that, with careful procedures and good business, you’ll steer your company away from the high risk label. To start, it’s best to understand the ins and outs of high-risk business.

What Is a High Risk Merchant?

A high-risk merchant is any business that is considered risky to credit card processors and banks. Being labeled as a high risk can easily cause a major issue for your business. To be able to process transactions, getting approved for a processing agreement is more of a requirement for long-term growth than a preference. Businesses that experience (or are likely to experience) a higher volume of chargebacks are more likely to be accepted by a high risk merchant provider than a traditional one.

Eligibility varies from provider to provider. What one provider considers to be risky might be different for another provider. However, being riskier means that you’ll have higher rates and not-to-favorable terms. This is just an ends to a means. As your business grows, you’ll be able to negotiate your contract and revisit your situation.

Get A High Risk Merchant Provider

A high-risk label is similar to having a low credit score: the lower the score, the higher your interest rates will be. And furthermore, a credit score that’s too low might only be eligible for secured credit cards (which require a deposit).

High-risk companies don’t have to lose it all. Fortunately, there are high risk merchant services that specialize in dealing with these situations. High risk merchant providers are prepared to take on the higher risk for a price tag that aligns with that risk. They’re more tailored to your specific needs, so you benefit from a unique setup and dedicated support team.

What Makes A Merchant High-Risk

There are several different reasons why your business would be classified as high-risk. Here are a few key reasons that could be the deciding factor:

Low Credit Score: Bad credit can be a serious issue when it comes to getting approved by credit card processors. This is because many processors have a very low-risk tolerance for business owners who have had issues with credit and payments in the past. In some cases, this can be a quick fix with a reliable, high credit score-co-signer. Otherwise, working with a high risk specialist is often the only way to still run your business.

No Previous Processing History: Similar to having a low credit scores, it can be tricky for business owners with no previous processing history to get the support of standard processors. In this situation, it’s not as difficult to build up a positive track record with a steady, reliable stream of transactions. Eventually, you’ll be able to leverage that solid track record to get lower rates and better agreements.

New or Growing Business: Some banks consider new or growing industries to be quite risky. For example, a cannabis business owner, even in states where cannabis consumption is legal, could have difficulty getting a card processing deal. Regulations and requirements in growing industries, particularly when health is involved, can be complicated and cumbersome.

Risky Industries: Depending on the history of the business owners, those companies in certain industries could be considered high risk. For example, within the travel industry, cancellations are common. Businesses that sell supplements (i.e. fat burning pills) and any multilevel marketing business could also be viewed as risky. This is of no fault to the business owner, but establishing your own business history can help negate the label.

History of Too Many Chargebacks: A chargeback is an order of protection initiated by banks for their customers. This is a complaint that the cardmember makes when it has an issue with a transaction. If you’re a business owner whose previous credit card processing agreement was cancelled, you may have been placed on the MATCH list.

MATCH is an acronym for Member Alert to Control High-Risk (also referred to as a Terminated Merchant File), and this list is managed by MasterCard to help banks screen applicants on whether they should be granted access to traditional payment processors. For many merchants, being put on this list can feel like being blacklisted. Fortunately, if the reason you’ve been placed on the MATCH list is because you’ve had too many chargebacks, it’s an easier issue to fix than say, being on the list for fraudulent activity.


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