What does it mean to be a High Risk Merchant?

Have you ever wondered what kind of business would be considered as high risk to merchant service providers? 

Regardless of the type of business, be it restaurants or retail, if the charge back proportion (the amount of payments denied) exceeds 1%, the business would normally be categorized has a high risk merchant and the deal may even be considered as impossible to make 
Even if the business receives telephone solicitation, door-to-door sales, MLM, or is reached out from an order processing agency, once the account is viewed, the business would still be considered as high risk

On the other hand, if the owner of a regular restaurant or small retail store has bad credit history, there is also a possibility the business would be deemed as high risk  
Businesses dealing with high ticket items, or if the volume of transaction is significantly higher than normal, they may also be considered as high risk. 

Here are a few industries that are often treated as high risk: electronic cigarette, medical marijuana, adult store industries, collection agencies, dietary supplement, weapons dealer, tourism, foreign exchange trading, sports information industry and online education. 

It is important to remember that services or commodity stores who charge the customers earlier than when the service or product is delivered have higher charge backs than normal
This would also apply to subscriptions and online memberships.

Of course illegal services, or anything close to it is automatically high risk and may not even be considered for merchant services 

However, remember that just because corresponds to the about mentioned business type, it does not mean that establishing a merchant account is impossible. By changing the payment method, or eliminating some products handled, you may be able to resolve some of the issues that would cause your business to be high risk.

Sometimes, a merchant is willing to allow transaction if you agree to a make a deposit, keep a reserve, or agree to a monthly limit. Through this, you are able to build a trust relationship with the processor and makes it possible for the merchant to help you later on. Having a continuous relationship with a merchant can be an advantage for your business.  

For more information, please contact us 

CoCardLA
(866) 953-1766