Is Your Business High Risk?

Many of the merchants don’t understand why their business is high risk. Banks look at the different features of your business that may potentially jeopardize the integrity of their bank’s name. Your risk factor could be the result of one feature or a combination of several. Let’s take a look at the different features banks consider when labeling your business as high risk. All these things let you know the basic question that ‘is your business high risk?’

Chargebacks and Refunds

One feature acquiring banks consider when determining your risk factor is how many chargebacks and refunds your business may receive. If you own a business that has a long period of time between customer payment and delivery of goods–like furniture sales or a travel agency–then this will definitely raise your risk factor.

Type of Industry

Some industry types have strict age regulations–adult entertainment, tobacco, cigars, alcohol–that will cause acquiring banks to label your business as high risk. The replica industry is high risk because unscrupulous merchants may try to pass off their goods as originals.

Payment Processing History

If you already have a payment processing history of high chargebacks and refunds, this will land your business in the high risk pool. Having a terminated merchant account will also grant you access to that pool. Your payment processing history will say a lot to acquiring banks about what they can expect from you.

Payment Methods

Some payment methods are more high risk than others are because they raise the risk factor of fraud or buyer’s remorse. Acquiring banks consider card-not-present transactions (e.g. online payments, mail order/telephone order payments) very high risk because the cardholder is not present to sign the receipt for their credit card purchase. Since there is no signature required, it’s much easier to get away with a fraudulent, unauthorized purchase.