Everything you need to know for your business to thrive with Payment Pluss
As a business owner, there are a number of hurdles you need to overcome to be successful. Payment processing should not be one of them.
Card processing has quickly become a standard for consumers who enjoy the convenience of cards and the peace of mind of minimizing cash on hand. However, if you operate in a high-risk industry, this process can become difficult, as many traditional forms of card payment processing aren’t available to you. Furthermore, when alternative solutions are available, they often come with higher processing fees.
The best high-risk merchant accounts are those that partner with verified, trusted vendors who focus on this area, and Payment Pluss specializes in offering high-risk payment processing solutions. We provide our services to all high-risk merchant accounts—whether they’re traditional brick-and-mortar businesses or high-risk merchant accounts online. This means you don’t have to worry about being turned away. We also offer numerous additional benefits to our clients that go above and beyond the offerings of other high-risk credit card processors.
If you’re not entirely sure which risk category you fall under and you’re looking to learn more, this article will help you gain a better understanding of where you stand, how it affects your operations, and how Payment Pluss can help.
What Is a High-Risk Merchant Account?
By definition, a high-risk merchant account is one where the specifics of the business operations or the industry the business operates in pose a higher level of risk than average to financial institutions and services.
Risks can take several forms in the eyes of a financial institution or payment processor. For example, there are high-risk transactions (such as high-risk ACHs or high-volume transactions), high-risk business bank accounts, high-risk products, and high-risk industries.
Read on if you’re interested in learning more about the various factors that can drive an operation to be labeled high-risk.
Reasons Accounts Are Deemed High-Risk
There are a number of reasons why a business could be labeled a high-risk merchant account. For instance, accounts can be deemed high-risk for:
- Accepting international payments
- Being a new merchant
- Having a low credit score or insufficient credit history
- Having a high volume of transactions
- Having higher chargeback or fraud risk
- Being situated in a high-risk industry
Unfortunately, many of the reasons your account may be considered high-risk are unavoidable, depending on the nature of your business or the industry in which you operate. As a result, it’s imperative that you move forward with an understanding of the various implications of such a status and the steps you need to take to thrive in the face of them.
What Is Considered a High-Risk Business?
Again, there are various reasons why an operation can be labeled high-risk, and sometimes, this is merely due to the fact that the business operates in a high-risk industry. Examples of high-risk verticals are:
- Cannabis-related businesses
- Adult industry
- MLM businesses
- Gambling
- Online dating
- Weapons
While finding financial and business support via traditional routes may not be possible, there are alternative options. Payment Pluss is a high-risk payment processor that focuses on servicing clients in high-risk industries.
High-Risk vs. Low-Risk Merchant Accounts
We’ve touched on the various factors that can determine whether an operation is labeled high-risk. But what about the components of low-risk merchant accounts?
There are a few core differences between the two, and they’ll help you in your efforts to assess your particular risk category. Characteristics of low-risk merchants include:
- Businesses where monthly transactions are capped at $20,000
- An average transaction value of less than $500
- Businesses operating in a single country
- Businesses with low chargeback risk and low percentage returns
- Merchants within industries that are labeled low-risk
As you can see, the differences are distinct. To give you a better understanding of what a low-risk industry looks like, verticals in this category include solar power, wind power, 3D printer manufacturing, corporate wellness services, and even online hotel booking.
What to Expect From Being Labeled a High-Risk Merchant Account
If your business is considered to be a high-risk merchant account, there are a few obstacles you should be aware of and additional information you may need to disclose. Fortunately, you can address a few of these hurdles by giving yourself enough lead time.
Longer Application Process
Building in additional time for your application process to be reviewed and approved is essential, as high-risk merchants can expect a longer application process than others. This is because the underwriting process is much more extensive due to the risky nature of the industry. As a result, it will take some time before you can officially get to the point of processing card payments.
Risk-Adjusted Fees
Naturally, a higher risk is associated with higher fees. Companies tend to offset risk in the form of fees, and as a result, you can expect to pay more for certain services, such as higher credit card processing fees.
Cash Reserve
As you may have noticed, many of the obstacles associated with operating in a high-risk industry revolve around financial institutions’ determination to mitigate risk. Cash reserve requirements are another method used for this purpose. These can take various forms, which we’ll discuss below.
Rolling Reserve
A rolling reserve is the most common model you’ll encounter. In this scenario, a certain percentage of the funds from your cleared transactions (usually around 5-10%) are held for a period of six months.
Upfront Reserve
An upfront reserve, as the name suggests, is a reserve that is required as soon as you officially establish your relationship with your payment processor.
Capped Reserve
A capped reserve is similar in theory to a rolling reserve. A certain percentage of funds (usually 5-10%) is held from each cleared transaction deposit. The key difference compared to the rolling reserve model is that the total amount held is capped at a certain monetary amount.
Volume Caps
Volume caps are another strategy used to mitigate high-risk payment processing. Because you’re already operating in a high-risk industry, your transaction volumes will most likely be capped to avoid veering into an excessive risk category. It’s important to understand what this limit is so you can operate and thrive within the bounds of these restrictions. Fortunately, one benefit of clients who partner with Payment Pluss is access to higher sales volumes.
Benefits of Getting a High-Risk Merchant Account with Payment Pluss
While there are many drawbacks to being a high-risk merchant, one upside is the ability to partner with a payment processing solution such as Payment Pluss. Our clients enjoy a variety of perks, including the ability to process international transactions, increased fraud protection and recurring billing, and access to higher sales volumes.
Why Payment Pluss Offers the Best High-Risk Merchant Account Services for Your Business
Let’s face it—operating in a high-risk industry isn’t the simplest endeavor. But that doesn’t mean it can’t be fruitful. Partnering with Payment Pluss can make your journey easier because our primary mission is to help businesses just like yours, giving you access to the tools and support you need to level the playing field. Our processes and pricing are fair, honest, upfront, and transparent, and we can provide you with the peace of mind you need to grow and thrive.