For whatever reason, traditional lenders such as PayPal have declined to partner with your business because they have deemed you to be a so-called high-risk merchant.
Initially, their refusal may make you feel like the middle schooler who was left un-chosen by both teams in gym class.
However, once you understand how to navigate the approval process and become aligned with a reputable high risk merchant account provider, you will come to see the advantages that this relationship can bring to you, your company and your customers.
How did you get here?
Let’s start by helping you understand why you may have been placed in the high-risk category in the first place.
Lenders are in business to make money just as you are. To that end, they will always want to partner with companies who represent the highest possible likelihood that they will make their payments on time and in full and with minimal extra work or drama.
Several factors about you or your company can represent impediments to this goal on the lenders’ part. Your industry might carry a reputational taint or operate under extensive regulations that demand extra work to guarantee compliance.
Alternatively, your credit history might be poor, or you simply might just not have enough business experience. Your company might be subject to higher-than-normal instances of fraud or chargeback or process many big-ticket transactions.
Whatever the case, you are now considered high-risk, and there is nothing you can do about it other than to get approved by the provider that most effectively meets your businesses and customers’ needs.
What to expect with your high-risk merchant account
For the most part, your high-risk account works in the same way as a conventional one does. Both give you everything you need to securely process a variety of payment types from your customers.
The difference is that you can expect additional fees, higher security and possibly more scrutiny and time required for your application to be approved.
How to choose a high-risk account provider
There are several important considerations that you should keep in mind as you do your research in the ultra-competitive marketplace of high-risk merchant account providers.
Some specialty businesses operate under complex regulations or require in-depth knowledge that only a provider with direct experience in their sector can furnish. If this sounds like you, seek a reputable company with expertise in your industry.
Next, obtain price quotes from several. Review each agreement to determine which option meets your needs at a price you can afford. Remember that cheaper is not always better.
Additionally, carefully examine all of your choices to see which furnishes the best, most reliable customer service. Read testimonials from current and former customers, and make a practice call to see how long it takes for a knowledgeable professional to speak with you.
In general, several qualities are key in a premium high-risk merchant account provider. You need industry expertise, transparency, fair pricing and reliable and prompt customer service.
Once you arrive at your chosen provider, it’s time to go through the approval process.
Tips for a smooth high-risk merchant account approval
First, find out what you are required to do in order to open an account. This will vary by industry, but you might need to provide additional documents or remove specific wording or images from your website.
Next, it’s time to find out how long the approval process will take. For the most part, instant approvals are an illusion; it usually takes at least a day or two and up to five before the approver’s bank comes through with an actual acceptance.
Talk to the provider to learn what will be expected of you after the account is open.
Will you be required to provide a rolling reserve? Will there be a monthly processing cap or any other restrictions?
Once your questions have been satisfactorily answered, the processing company will have inquiries of their own. Specifically, they will want to know how you process your payments, your monthly volume, average ticket amount, years in business, chargeback percentage and any account shutdowns.
Finally, they will make sure that your website is in compliance with security standards.
Increasing your chances of high-risk merchant account approval
In general, there are three cardinal rules of high-risk account approval. Begin by choosing only a company with demonstrated direct experience in your industry. This will pave the way for smooth, secure and flexible payments.
Next, be sure that your history is as clear as possible. Resolve any outstanding payments that you may owe to a previous merchant account provider so that this negative history does not come back to haunt you in your new relationship.
Finally, be conscientious about submitting every piece of information that the company requests in full and on time. Failure to do so will lead to delays in processing and might even fatally jeopardize the fate of your application.
In addition to these suggestions, there are other steps you can take to improve the chance that you will be approved. For one thing, maintain a good credit score. Wherever possible, take steps to gradually increase it over time so that you can demonstrate steady improvement.
Additionally, be fully transparent with your provider. The underwriting process is long and extensive and will uncover any secrets you might be trying to keep.
It is better to fully disclose the nature of your business and even any aspects of your dealings that you are not proud of such as a low credit score so that they can be addressed proactively.
Finally, your website should always be updated and accurate. There should never be any question in the provider’s mind about your ability to securely process payments in compliance with PCI and industry directives.
The process of setting up a way to accept payments online is crucial for any business that wants to succeed in today’s ecommerce ecosystem.
When you take the time to partner with a high-risk merchant account company that is familiar with your industry and offers payment choices, pricing structures and contractual requirements you are comfortable with, you can launch a productive relationship that will serve you and your customers well for the foreseeable future.
