Do you need a second high risk merchant account?
Getting a single high risk merchant account can sometimes take ages, and if you are planning to have a second one, be cautious about the way high risk merchant account dealers are likely to receive you. To begin with, all your paperwork is going to keep circulating among the same underwriters eventually, but only through different sources, so it might just seem like a desperate move.
Also, when merchants find out about your aggressive shopping sprees they might speculate that you’ll be willing to switch merchant account providers as soon as you find someone who offers low processing rates, so why should they bother with you?
So now the question arises that if you’re already secured about the first merchant account, should you still be asking for another one? There is no clear cut answer to this question, except for- it depends! Now, depends on what that is described in the following:
Keeping it safe
The most overreaching reason for why a merchant will look for a second high risk account is the potential threat of termination of his existing active account. This scenario does not apply to low risk merchants, but in the realm of high risk businesses, it usually takes weeks together for getting an approval for a high risk merchant account. Its closure can bring a gap in your services, taking your prospective customers to other competitors.
In order to avoid the ugly situation, many online businesses think, it is a better to have a backup, and be insured against competitors stealing your customers only because you were not able to manage the payment system. And, while this point holds a lot of validity, using multiple accounts is not meant for everyone.
Why not to have a second account?
Having said that a second high risk merchant account is an essential backup against losing the first one, there is something more important to keep in mind. Every merchant account comes with a set of terms and conditions that depends on the volume of the business. Remember that high risk merchant account processors do not entertain businesses that don’t deliver a certain volume of business- the average amount being $100,000 worth of processing per month.
The higher the volume of business, the more favorable the terms are likely to be and vice versa. Now, imagine what would happen when you split the volume between two processors? There are two possibilities in such case:
- You state the same volume of business when you apply for the second high risk merchant account. But this will require you to deliver business volumes correspondingly; failing which, there is risk of your account being shut down, altogether.
- The second scenario is that you enter in each application form, the amount you intend to process with the two processors, separately. Yes, you’re bound to get worse terms for both, but at least you won’t end up risking a good stand with both.
So, in conclusion, it is your take to decide in favor of having a single or multiple high risk merchant accounts. If you think you have the volumes to satisfy them both, go ahead, otherwise it is easier to hold on to the existing account than getting a new one.
