To thrive in a growing global economy, many merchants, especially those in e-commerce, are finding that the advantages of using a high-risk payment processor outweigh the disadvantages of higher processing fees. Normal or low risk processors place limits on card transactions that can hamper online growth. For example, processors restrict or prohibit low-risk merchants:
Deal primarily in card less transactions
Transaction in multiple currencies
Sale to customers outside of the United States, Canada, Western or Northern Europe, Japan or Australia The earning potential of online sales alone can make high-risk merchant accounts attractive; Add the sales prospects to more places – and in multiple currencies – and the income opportunities might just outweigh the risks.
Unlimited income potential
Processors also limit the type and amount of income generated by low risk merchants through credit cards. For example, low risk merchants cannot:
Offer recurring payments
Process over $ 20,000 per month
Accept credit card transactions over $ 500 each
Sell certain products or services
But a recurring payment (subscription) model can become a sustainable source of long-term growth. In fact, many merchants rely on the regular income that installment billing and recurring payments can generate, and find it worth hiring a high-risk processor. The same goes for traders who are looking for the potential benefits of expensive transactions.
Risky products can mean increased profits
There is also a long list of products and services that credit card networks deem too risky for low risk merchants. At a minimum, a business with one of the following MCCs (Merchant Category Codes) is automatically considered high risk by card networks:
Travel arrangement services
Incoming or outgoing telemarketing traders
Bets, including lottery tickets, casino game chips, and off-track or on-track betting
Pharmacies and pharmacies
Cigar shops and cigarette sales without presence
This is just a small sample of all “blacklisted” MCCs. These constraints make it difficult, if not impossible, to sell products or services in some of the more lucrative niches. With a high risk merchant account, however, a business can sell just about anything imaginable.
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While traditional merchant accounts typically charge lower chargebacks than high-risk credit card processing, the merchant / processor relationship can be tenuous. Acquiring banks continuously monitor their merchants’ billing throughput ratio per transaction. If the chargeback threshold – typically around 1% – is exceeded, the acquirer can abruptly terminate the merchant’s account. At this point, the business will be forced to look for a high-risk merchant services, stop taking credit cards, or simply shut down.
A high-risk merchant account, on the other hand, is very rarely terminated due to excessive chargebacks. The trader may pay higher fines, but the longevity of the business is not in danger. Of course, the ideal is always to keep delinquencies as low as possible, but the trader doesn’t have to panic during a bad month.
iPaytotal specializes in merchant accounts and offshore processing for high risk businesses… and those operating in high risk areas. They offer an impressive range of international accounts, each of which can be configured to accept over 150 major currencies. Ultimately, all indicators of potential risk boil down to chargebacks. A processor examines the merchant’s revenue, offers, and typical customers to determine the risk of chargebacks. While the subjectivity of the review process can’t do much, a merchant can prevent chargebacks.
Managing chargebacks is important to all merchants, but it becomes a critical task in the context of high-risk credit card processing. Assuming that a merchant does not make a conscious decision to use a high-risk processor, there are scalable business solutions to mitigate risk for all types and sizes of business.
IPaytotal needlessly steal profits. The processing of the high-risk credit card payment should be the merchant’s choice, not just a determination based on chargebacks. Whether you are currently working with a reputable high-risk payment processor or want to avoid the wording of “high risk” altogether, iPaytotal can help you increase your profits and ensure the sustainability of your business. Contact us today and we’ll show you how.