Things Merchants Must Know About High Risk Credit Card Processing

Choosing merchant accounts is a tedious process. A lot of factors go into the decision-making process, and the unequal consideration of any of these factors can often threaten the growth of a business in general.

It is therefore important that merchants be apprised of every little detail or factor that plays a significant role in high risk credit card processing.

Firstly, it is important to understand what exactly is high risk credit card processing and why the use of the term high risk.

What Is High Risk?

Card processing companies usually have different definitions for high risk. So it may well turn out that you are high risk for one, but not for the other. High risk as a premises takes a number of things into consideration: like the credit score, the business type, the average number of chargebacks etc. The numbers associated with each of the metrics decides the relative risk. For example, for a business prone to high number of chargebacks, the tag of high risk is apt.

While these are metrics assembled over a period of time, certain businesses by definition itself are deemed high risk. These are business types with a dodgy image, a volatile market or simply too secretive in operation. Examples can include the adult industry, pharmaceuticals etc. Such business types are deemed high risk from the outset.

Rates For High Risk

Quite naturally, since your business is a high risk type, the stipulations put forth by a processing provider will also be a tad harsh. A high risk business type will have a sales cap upper limit, whereby if the processing scale gets stretched, which can always be a criteria for high risk itself, the processing company charges extra. If the sales cap falls drastically, or the number of chargebacks go high, penalties are in place. The rates of processing high risk accounts is higher than general accounts as the risk associated is higher too.

Before choosing a high risk account, it is essential that you check the extra charges, the lower and upper limits of the sales cap, the charges per processing cycle, and other hidden or miscellaneous charges.

Essentials of High Risk Card Processing

As the whole scheme of things here is attached to the word risk, there are a number of features that are absolutely vital to have in your credit card processing system. Firstly, the sales cap should be flexible by which it should be able to handle any number of transactions at any given time. Second, high risk businesses are top of the target list of cyber criminals.

Therefore, high risk credit card processors are expected to have sound security and validation mechanisms in place, to prevent credit card fraud or attacks on the gateway itself. Third, since the transactions are being done by a high risk business type, inevitably, there will be a number of chargebacks. A processing company should aim at minimizing the number of these unwarranted chargebacks.