Big Opportunity or More Losses?
Every day more businesses are going out of business and layoffs continue to plague the nation. The traditional brick-and mortar merchant may slowly become a thing of the past. Many are trying their hand at home-based businesses and internet ventures. Over the past year we have seen a significant rise in companies like mortgage restructuring, debt consolidation, and various classified offerings online. Although these types of businesses are lucrative, they come with great risk to their owners and the acquirers that take on the challenge of processing credit cards for them.
Most may think that banks are not taking on these types of credit card accounts because of the financial state of our banks. There is a big difference between the acquiring side of banking and the issuing side. In fact, the acquiring side that handles credit card processing in the banking industry seems to be the only piece still making money and I predict they will continue to generate revenue. There are acquirers out there that are designed to specifically cater to high risk types of online businesses and have flourished in these industries. To make sure your new venture does not turn out to be a big loss, it is important to look for more than just a card processor to partner with.
Some important items to look for when starting a high-risk business online:
- Most acquirers that are approving online high-risk businesses set limits to how much you can process through your account. It also difficult to avoid a reserve account. Be prepared to have about 10 percent of your monthly Visa and MasterCard processing held for a minimum of 6 months. Also, be sure to pick a partner that provides load balancing services. This will ensure that your account is properly monitored, and you are not over burdening one account with transaction amounts that are over your limit, which could result in your account being shut off.
- When you are running a high risk business in a card not present environment, you run a greater risk of chargebacks. An acquiring bank typically does not allow for more than 1 percent in chargebacks. Look for a system that can monitor your disputes and provide quick and easy responses to your bank to prevent them from turning into a chargeback. This will drastically reduce the percent of chargebacks you get and allow you to continue growing your business.
- Look for a partner that has fraud monitoring systems. With all the identity theft these days, you want to make sure your transactions are safe and valid cards are being used.
- Make sure to pick a system that is easily modifiable for business growth.
Businesses that fall into the high-risk categories are legitimate businesses and can prove to be lucrative if monitored properly. This will contribute to merchant processing continuing to be a profitable and lucrative arm of banking.
Contact us Now or Call Us Now at 855-204-3838 and see how we can help you with your high risk merchant processing! Do it Now!