What Small businesses merchants should understand, and the Advantages of High-risk merchant?


Merchant services have become crucial for people aiming for success in the online ultra-competitive world. A small business owner has to face lots of difficulties, and this fact is well-known. Moreover, now having small business active online is a new level. Building on solid technology, the website and maintaining the e-store attractively, orchestrating logistics, marketing business, and running e-commerce start-ups are huge tasks.

What must small businesses understand?

Most small businesses have to understand merchant services online. It is a must as it encompasses collecting payments. Apart from the payments, there is returns and refunds management, fraud management, and chargeback, besides accepting payment localized methods beyond MasterCard and Visa. 

The small businesses must know that the critical designation is to understanding the working of the merchant services. How it helps in identifying the payment processing partners so that you join hands with their services. There is no standard one- industry identifying as high risk. Thus, it is subjective to get clarity. It may appear to be mysterious at times and sometimes gives an unfair judgment. However, from a merchant provider’s business perspective, it is always at risk for a chargeback. The merchant provider has nothing to think about the way you perform your business.  A few instances: 

  • Work from home- Your business location matters. A home-based business is riskier for payment processors. Doing a business out of the country designates you as a high risk merchant account. Thus, understand and plan your business place.
  • Time length- Having a long span even as small business assures you will get more willing small business merchant services as partnerships readily available. 
  • History – Your history matters. Be honest while you are shopping for new merchant services as partners. Ensure you solve customer problems, communicate clearly, and offer refunds.
  • Personal credit- Many business owners receive an impact due to personal credit history. Improve your credit for the merchant providers to find your favorable merchant provider to become your business partner.

Merchants are seen as high risk if your account shows a loss; it can be a company or personal credit, where you cannot support the sales volume. A high-risk merchant account is of high risk to the banks due to payment processing. Such high-risk businesses are prone to chargebacks that they pay high merchant fees as services.

A high-risk merchant has to undergo extra scrutiny to get merchant services. In fact, there may be limitations to their transaction numbers in a month. Above all, the high risk merchant services charge higher processing rates and fees from the high-risk businesses or high-risk merchant account.  Though, you may find some merchant services providers of high risk denying working with a high- risk merchant account.

Advantages of a High-Risk Merchant Account

There are several advantages to be identified as a high-risk merchant account. Of course, you must agree to pay additional fees and go through added scrutiny. The advantages that the high- risk merchants enjoy include:

  • Flexible payment acceptance- Merchants of low-risk collects revenue of certain types only by credit card. However, the high-risk merchants experience fewer limitations, and so they:
  • Sell a wider variety of services and products.
  • Process launch events and do higher volumes of sales, and special sales
  • Offer recurring payments.
  • Work internationally- The merchants with low-risk are restricted from international transactions and have limitations. At the same time, high risk merchant accounts can consider global expansion and have fewer restrictions.

The key is in choosing the high-risk merchant services. This merchant service provides high-risk are responsible for the processing of high-risk credit cards as partners. The high-risk merchant service providers must have a reputation and readiness to work with a range of businesses to offer equipment, processing services, and monthly contracts.

A merchant account receives a financial institution or a bank the acceptance to use their card for payment as their customers. The business type applying affects the associated level of risk with their merchant account. The high-risk merchant account poses a high risk as these merchants are into:

  • A product or service featuring a longer liability chargeback period. 
  • Your industry has high chargeback history.

When such conditions prevail, the banks are not ready to spend many resources in handling your account. They turn you off on exceeding chargeback thresholds and do not support the sales volume you are applying for.  Thus, a merchant with high risk will have difficulty in getting merchant services.