Steps to open high risk merchant account
One of the most widespread misconceptions regarding high-risk merchant accounts is that merchants must have done something personally wrong or involved in criminal activities. It is not always true. Banks or financial institutions that deal with the merchant accounts divide businesses in certain categories i.e High risk, Low Risk and Mid risk. A business entity is indicated as high risk when it carries a higher risk of fraudulent transactions, chargebacks, and other such issues in these industries according to the information collected by the banking industry.
The banking industry always likes to deal with safe and secure merchants, and this is the reason they try to escape opening high-risk accounts.
Nevertheless, it does not indicate that a high risk merchant is not able to open a merchant account if you have a business that is categorized as high risk by the banking industry. Getting a high-risk merchant account approved can be a simple process if you are aware of the right path.
Steps to open a high-risk merchant account:
- Register the Business
Business registration as Private Limited or Limited Liability or Corporation is mandatory to open a merchant account. After completion of this process, merchants will require an article of incorporation and certificate of incorporation to get a federal tax identification number.
- Keep Ready other important docs
Although merchants have Certificate of Incorporation, Article of Association and Federal Tax Identification Number, banks or financial institutes will still ask for bank statements, processing history and Photo identity Proof. If you are new to this industry, you will be asked to submit a business plan.
- Analyse your business requirement
Before hounding for a merchant account, firstly the merchant should understand the requirements of his business. If you have a brick-and-mortar business, your client will prefer to complete their transaction through credit cards, so you will require a credit card terminal, even merchants can consider NFC enabled terminals for contactless payments, mobile payment solution and POS system for integrating online and in-store sales. If a merchant is having business online, he will require a payment processing solution for his online sales.
- Ask help from broker
Brokers are experts in this field, they are aware of the requirement of high-risk merchants. They can cater to those businesses, but at a higher cost. The advantage of dealing with specialists is that they know the status of high-risk industries; eventually the approval rate is high when you deal with a merchant account provider with expertise in high-risk businesses.
- Market Study
Getting approved for a merchant account from banks and other financial institutions may be difficult, but it does not mean merchants do not have choice or they have very limited options. There are lots of merchant account providers in the market, so before signing any agreement with any provider, merchants need to check few factors
- Hidden fees should not be there
- Settlement period should not be more than 15 days
- Customer Support
- Unnecessary charges
- Read the agreement carefully.
Merchants will be required to pay account fees and processing fees. Merchant should look for a deal where he needs to pay the minimum amount of money as processing cost. But for businesses with low sales size, it is advised to negotiate to keep minimal account fee as processing rate will be high only. Businesses with high sales, it will be vice versa.
High risk merchant has no difference from a normal merchant account. But high risk industry’s merchants are required to follow the above mentioned steps and save their pockets. There are lots of agents in the market, who are very knowledgeable and expert in this industry. Merchants can take help from them as well.