Am I a High Risk Merchant?
The term merchant applies to any company that is selling products and/or services to customers. The term merchant account refers to the third party credit card processing services that a company must have if they wish to accept credit or debit cards from their customers. While a company can, in theory, get by without accepting credit card payments, the truth is you’ll be alienating a large portion of customers if you do not accept credit cards from them. An increasing number of consumers prefer the increased security and optimal convenience offered by credit cards, and thus they do not carry a lot of cash. Rather than have to turn away customers, it literally pays to accept credit cards for purchases.
Typically a merchant account can be secured from the company owner’s business bank, the owner’s personal bank, or from a third party financial institution that offers merchant services. But for the high risk merchant, there may be a bit more leg work involved. You are a high risk merchant if the nature of your business means that there will be more than the average number of credit card refunds issued on a regular basis. Examples of high risk merchants include:
- stores that sell alcohol or tobacco
- adult-themed companies, including escort services and dating websites
- online, phone, and mail order companies
- new business start-ups that are deemed risky by their investors
- vehicle repossession and towing companies
- businesses whose owner has a poor credit rating
But while a high risk company may have a harder time securing credit card processing services, the good news is that there are credit card processing services available. For the electronic cigarette company, for example, there will be an electronic cigarette merchant account. What is important is that as a high risk merchant, you take the time to seek out credit card processing services that are marketed to your high risk category. Ask merchant providers up front if they offer high risk credit card processing. If they do, then proceed to filling out an application. And if not, move on to a merchant provider who will work with you.
Category: Business
