Why is High Risk Credit Card Processing So Expensive?

If your business is considered a high risk merchant, you already know how difficult it is to obtain a fair payment processing account. High risk businesses often get declined merchant accounts from certain payment processors. And if they are accepted, they’re charged much higher rates than other businesses. So, why is high risk credit card processing so expensive? And what steps can you take to pay less for payment processing? Keep reading for all your high risk merchant account answers.

High Risk Merchant Account Rates

A payment processor won’t accept you if they think you pose a bigger threat of losing them money. They’ll avoid your business type altogether and accept no one from your industry. Or if they do accept you, some processors will raise your rates and tack on excessive fees to balance out the risk you pose. That’s why high risk credit card processing is so expensive. 

Here are some reasons a processor might consider your business a high risk merchant account:

  • Bad credit
  • Offshore businesses
  • Borderline illegal businesses
  • Questionable sales and marketing tactics
  • Potential legal and financial liability
  • Industry known for excessive chargebacks or fraud incidents

How to Obtain a High Risk Merchant Account

If you’ve been denied a merchant account from numerous processors, don’t give up hope. There are many providers that specialize in high risk merchant services, so they’re most likely to approve you. Those accounts might just be at higher rates.

One thing you should keep in mind is that while you may be considered a high risk merchant account with one processor, another processor may not put you in the high risk category. It depends on how strict or lenient approval guidelines are for each processor. If you like what you see from a processor during your search, you should apply for their services anyway, so you can be sure you’re getting the best rates for your business.

Tips to Lower High Risk Processing Costs

  1. Avoid preset limits.

Companies that specialize in high risk credit card processing will often give you an account with preset limits. This looks good to businesses just starting out. However once you prove your business successful and process a higher volume of transactions, the provider will charge a penalty fee if you exceed the preset limit. This will quickly diminish your profit margin, so it’s very important to obtain a merchant account with an unlimited transaction volume. When you compare different payment processors, make sure you find one that allows you freedom to grow your business, even if it’s high risk.

  1. Read your contract.

Most processors will force you to sign a contract with them. (Notice how we said most, not all.) You should always read the entire contract before you sign your name. Ask as many questions as you want about your merchant account, so you get a clear understanding of what everything means. Pay close attention to features, limitations, restrictions, and termination fees. Or choose a processor that doesn’t lock you into a contract (like Fattmerchant!).

  1. Carefully select a processor.

Seek out a reliable and trusted merchant account provider that will work with your business. Even though you’re considered high risk, that doesn’t mean you should settle for less than average services and higher rates. Choose a payment processor that will negotiate terms with you, so you can receive the solutions your business needs from a credit card processor. Look up payment processor reviews to see what other businesses have been saying about each prospect.

  1. Get the processing solutions you need.

Your plan with any processor should include the solutions you need to run your business for fair prices. This means that you can accept the types of credit and debit cards you want without various fees based on the brand of credit card. You should also receive the right terminals and solutions for your business at affordable pricing. Don’t settle. Compare merchant account costs to see which rates, services and solutions work best for your business.

  1. Security is a priority.

Secure payment gateways and virtual terminals are a critical component to look for when searching for a payment processor. Ensure that all transactions made online are protected by encrypted server transactions. Sometimes payment processors will be backed by large security and technology companies to ensure all their accounts are safe and transactions are secure. That’s a good sign. (Fattmerchant is backed by Vantiv, a large U.S.-based payment technology and security company.)

  1. Online viewing and reports.

Due to today’s technology, there are rarely any processors that don’t allow real-time reviews of sales reports. Therefore, your processor should definitely offer online viewing and reports, rather than traditionally mailed transaction reports. That way, you can keep track of your transactions and reports at your convenience.

On average, Fattmerchant saves businesses over 40% on credit card processing when they switch over because we offer merchants access to direct cost processing— no fees, no markups and no contract. Find out if your business qualifies to see just how much you can save by signing up with us. Together we can make your wallet FATT with savings!
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