Determining the Risk Factor For Your Business
Since an e-commerce business always has certain risks associated with it, an acquiring bank always considers determining the risk factor before the approval of merchant accounts. This helps banks to clearly estimate the level of risk and see whether a particular business has eligibility for a merchant account or not.
If you too own an online business and need a high risk merchant account for smooth credit card processing, you should know how acquiring banks determine the risk factor associated with your type of business.
Here is an account to different features of low, medium and high risk businesses that make them fall in their respective categories:
Low Risk Businesses:
- Your business’s relation to low-risk industry like household goods, clothes and books
- Operating your business in a low-risk nation such as USA, Australia, Canada or Northern Europe
- Having a monthly sale volume of $20,000
- Average ticket size of $50 or less
Medium Risk Business:
- Your business connected to medium-risk industry like payday loans, penny auctions and gaming
- Operation of business in medium risk country like Latin America, Israel, Central Europe or Malta
- Monthly volume of $20,000 and $100,000
High Risk Business:
- Your business is related to online gambling, adult services, online traveling agency and e-cigarette sale
- You are operating your business in high-risk locations such as Southeast Asia, Russia, Easter Europe and the Middle East
- Your business has a monthly volume of $100,000 or above
Additional Factors Determining the Risk Factor
Another important aspect that acquiring banks consider while evaluating the level of risk associated with your business is the history of your business. The questions your acquiring bank will ask about your e-commerce business will be related to:
- The payment processing history of your online business
- Termination of your merchant account by your acquiring bank in the past
- A valid reason in case if you had your merchant account ceased
- The level of chargebacks associated with your business
- Detailed information about the products or services that you sell or provide online
- Specifications if you were using your merchant account to process credit cards for another merchant
- Your overall credit score
Features that Make Determining the Risk Factor Confusing
In some cases, e-commerce business features are extremely varied and make it difficult to clearly determine all the risk factors. Where some aspects may raise the risk factor of your business, others can lower it. So, having a clear idea of which factors favor your type of business will be highly helpful in lessening the overall level of risk!
To know more about the calculation of risk factors and how that impact your individual type of business, call 702-456-1116 or write to us at email@example.com.