What’s Considered A High Risk Business?
August 26, 2023
A business is considered high risk if the company functions in an industry banks categorize as high risk. These high-risk businesses may operate in unique verticals like CBD or have payment models like subscription billing which can lead to higher chargeback rates.
List of High Risk Factors
So what exactly qualifies a business as high risk?
Below is a list of factors that your company should be aware of. Each of these factors is a component of a high risk business.
- Your industry is listed on the High Risk Industries List
- There are high chargeback ratios in your sector
- You are a new business and have no credit or poor credit
- Employee turnover rate is above average
- Your business experiences a high amount of returns and refunds
- You have been classified as a terminated merchant (TMF) because you had excessive chargebacks and lost your previous credit card processor.
- Your business deals with multiple currencies
- There are high dollar transactions from the products or services you sell
What To Do If Your Business Is Considered High Risk
There’s good news. Even if your business falls into the high risk category, there are payment processing companies that can still facilitate transactions. If you are one of the business owners that are in need of merchant services, you will need to make sure your company is following the local, state, and federal laws and regulations. Once the company is compliant you may even be able to get your account instantly approved.
One of the best ways to avoid being labeled as a high risk business, if you are not already in this category, is to avoid chargebacks as much as possible. A chargeback is a forced credit card refund. If you are a company with a large volume of chargebacks, you may be in danger of losing your current payment processor. In this case, you will need to find a legitimate high risk merchant account.
Finding a reputable, sustainable, fair and safe high risk merchant payment gateway can be difficult. To make it easy, PayKings can work with you and walk you through the application process.
Is My Business Considered High Risk?
The following is not a comprehensive list, but does hit most of the well-known industries that are considered high risk. Examples include:
- Credit Repair
- Airlines and Booking
- Business Consulting
- Continuity Billing
- Subscription Boxes
- Pawn Shops
- Auto Warranties
What To Do If You Lose Your Credit Card Processor
Do not worry if you were dropped by your credit card processor like Paypal or Square. As long as your business is functioning within federal and state regulations and following the law, you can find a high risk merchant account that specializes in businesses that deal within that landscape.
As your startup grows or your company consistently gains sales volume, you gain leverage to negotiate processing fees. For sustainable solutions and a low cost payment gateway, contact PayKings.
August 26, 2023 | High Risk Merchant Account | Guest Post