Top 7 Fundamentals Every High Risk Must Consider

Angelena Iglesia

You know you need a high risk merchant account to set your risky business going, but you don’t know where to start.

More often than not, businesses that deal with gambling, gaming, guns, adult entertainment, pharmaceuticals, cryptocurrency, electronics, etc.—and many other products and services considered high-risk—struggle to open a merchant account, and start taking payments.

Underwriters would consider you risky for several reasons including but not limited to;

  • Excessive chargebacks,
  • Fraud risks,
  • Doubtful services and products that need legal approval;
  • Poor or doubtful business and/or personal credit;
  • High ticket sales using credit cards;
  • Selling to consumers with bad credit

Other factors like business type and model, as well as processing history may also lead to a high-risk categorization.

So what are the essentials to consider when opening a merchant account?


      1. Is the merchant account best for your business?


Different merchant account providers favor different businesses. For example, some accept crypto currencies, while others don’t. Moreover, what’s good for an established high-risk business may not be a perfect fit for a small high risk. And while some service providers might care for merchants from your niche, others won’t.

All those factors therefore elaborate why you must choose whom you work with carefully.


      2. Which merchant service should you choose


Merchant services vary from one vendor to another. Regarding fees, most merchant service providers charge an extra 1-2% per transaction. However, a retailer is expected to keep a reserve amount. It could be a Fixed, Rolling or Up-front reserve depending on your service provider. Make sure to familiarize and understand the preferable type of reserve funds in order to pick the right provider.


      3. Costs: including processing rates & fees 


Fee requirements vary by account type. They also vary from one account provider to the next. Some process credit card payments for a flat-rate, while others deduct an extra percentage fee per transaction.

Hidden charges and misunderstood fee plans & structures, can affect cashflow and ruin your bottom line.


      4. Understand the application process


Inquire about the application process—the steps involved and how long it takes to receive a response.

Some industries face more scrutiny than others so your sector may determine how long the application and underwriting process lasts.


      5. Open a business bank account


Use your business license and Employer Identification Number (EIN) to apply for a business bank account. This account stores all the revenue you collect from the sales you make.


      6. Learn the underwriting process and necessary documents


Understanding the factors many underwriters and merchant service providers look for can help you prepare better—and increase your chances of qualifying the first-time application.

Prepare your business bank statements, license, valid IDs, credit scores and any other documents that matter upfront.


      7. Payment processing hardware


Get POS (or Point of Sale) and Chip-card terminals or even the latest contactless NFC payments ready. You can also set up mobile payments.

The type of payments you take should determine the hardware you choose.

Final Words

Lastly, many businesses don’t remember to prepare a payment support system for their customers. Because high-risks are prone to chargebacks and payment problems, it is advisable to prepare a support platform that focuses on transactions.

Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated high risk merchant account provider in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.

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