Setting Up A High Risk Merchant Account For Your Small Business

In the processing world, many small businesses and industries are considered to be risky. If you have already been turned down by numerous credit card processors because of high risk factors, there are providers that will work with you, specializing in exactly the kind of help you need. Different providers have various definitions of what they consider “high risk,” but many industries such as adult services, casinos, Web site owners and collection agencies all fall under this category.

Benefits of a High Risk Merchant Account

While one provider may consider your business high risk, another may not. It all depends on the company’s underwriting guidelines, so it is best to look around before immediately jumping to a high risk merchant account. However, if you know for a fact that your business is high risk and have been told this by numerous providers, you will need to find a company that specializes in high risk merchant services.

High risk merchant accounts can help you to build good credit; many merchants are able to use these accounts as a good reference when applying for other forms of credit such as loans or credit cards. Additionally, you may be eligible to receive cash advances against future card receipts once you have held the merchant account for six months or more.

Costs of a High Risk Merchant Account

Unfortunately, owners of high risk business may have to cope with higher rates and less-than-ideal terms. If you are caught between a rock and a hard place, you may not have much room to negotiate terms to your liking. Keep in mind, however, that you should never avoid reviewing the details of your contract; for every one reliable and ethical high risk processor, there are over 300 unethical companies just waiting for the chance to take advantage of you. 

Your judgment may be cloudy, but make sure you research incidentals such as termination fees and rolling reserves. In general, high risk merchants may be stuck with higher fees, but you need the service; if no one else will approve you, you will simply need to make the best of the situation.

How to Get a High Risk Merchant Account

When selecting the best merchant account or a bad credit merchant account, your application must be handled by a professional. The account processor must have experience with similar merchants in your company’s industry, and it should have access to more than one credit card services such as offshore options and liberal banks. Should your business need to be taken offshore, your high risk experts must work to get you the lowest rate available and disclose these rates prior to contracting with your company.

Always be honest regarding your credit rating and any past financial challenges. Inform the processor of any judgments, bankruptcies or previous liens to improve your credibility and be open to any other options to give your company the best merchant solution. 

Operating a high risk business doesn’t necessarily mean that you will be unable to open a merchant account; instead, know what to look for and do your research when setting up a high risk account that meets the needs of your business.