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Is your business type labeled “high risk” for credit card processing? Don’t be offended.....

The reality is, there are a multitude of reasons why you may be considered high risk by payment processors.  From industry type to chargeback history, even public opinion or where you sell your products can contribute to your level of risk.   

Being labeled as high risk doesn’t have to have a negative impact on your business. When a new merchant account application is being considered, there are many factors that come into play.  Every high risk merchant account needs to be considered individually and placed with the best solution for their needs.  Both now and in the future.

Let’s take a look at why businesses may be considered high risk for a merchant account.

• Industry type
  • Products sold - Are the products sold morally, legally, or socially “questionable”? How are the products marketed?  These questions can all lead to a merchant account being classified as high risk.
  • Is the product legal in all 50 states? Or in other countries?  Products such as certain nutraceuticals, CBD, and hemp products, while legal federally, can be banned on a state or even municipal level.  The acquiring (funding) bank could be held liable for supporting the sale of “illegal” items.  Therefor, banks label these products as high risk or prohibited.
  • Charge back risk - Does the industry as a whole experience higher than average charge back levels? If so, all businesses within that industry can be labeled as high risk merchants.
  • Public acceptance (will your business potentially cause “brand damage” to the acquiring bank?) Industries that invoke social debate, such as guns and ammunition, can be labeled high risk because banks have to consider the politics of their shareholders.
• Location - are you strictly domestic or do you sell internationally
  • Non-US citizens operating a US based business.  International businesses selling their services and products within the US.  Even US based businesses operating internationally. These can all be flags for a high risk merchant account.
• Large Average Ticket Size
  • With a high average sale amount, the more “risk” there is to the processor in the event of charge backs.
• Processing and charge back history.
  • Has your merchant account been closed in the past?  Do you have a high ratio of charge backs (greater than 0.8%)? Is your refund ratio extraordinarily high?  These items could cause your merchant account to be considered high risk.
• Shipping and fulfillment policies
  • How long is it before orders are fulfilled?  Are they fulfilled by a third party? What is your shipping policy?  Long time frames between a customer order and receiving a product increase the risk of charge backs due to consumer dissatisfaction.
• Subscription plan and policies
  • What customer commitments are required and the ease of canceling are significant factors in determining risk levels for your merchant account.
• Personal credit and or criminal history
  • Recent bankruptcies and felony criminal records can affect the risk level of your merchant account.

As you can see, there really is no “cut and dry” reason your business requires a high risk merchant account.  It can be a combination of factors.  However, some industry types are nearly always considered riskier by most payment providers. 

It is important to work with a reputable and experienced merchant account provider who can navigate the complexity of high risk merchant services.

B.I.G.’s team of certified payment professionals leverage decades of experience with our vast network to provide a consultative approach.  Unlike many other high risk providers, our focus is on the success of your business. We put your business needs and challenges first, not our margins. Our focus is on pairing you with the best solution for your business and merchant account sustainability.

Our cutting edge tool set and in-house service allow us to provide the best in class service your business deserves.  As a full service provider, we don’t just sign you up and run away.  We are here for you and your business - for the life of your business.  Experience the BIG difference today.

One of the most common questions we get is – “what are your rates?”.  This is one of the most understandable questions, but sometimes one of the most difficult to answer. 

We understand the biggest obstacle many high risk businesses face is affording the costs involved with accepting card payments. With high risk payment processing, there's a huge range of factors that can make answering this question extra difficult. The rates and fees charged by payment providers depend on several factors:

• The pricing model used by the processor
• The risk level the merchant represents
• Total monthly transaction volume
• How the merchant accepts card payment information (card-not-present ecommerce or in person chip or tap-to-pay)
• Type of cards accepted (reward, business, corporate, etc)

We offer an Interchange Plus Pricing Model.

One way we set ourselves apart from the competition is through our transparency.  Interchange plus pricing is the most transparent billing method available.  You might be wondering what Interchange Plus Pricing entails.

Interchange is made up of the rates and fees that card issuing banks and card brands charge everyone using their products.  The Interchanged is used every time a credit card transaction is processed. In a nutshell, we take the published VS & MC Interchange pricing tables and add a fixed percentage to those fees.  With this method, you actually know what you are paying for your merchant services. That is why it is the most transparent pricing model.  With this method, we never hide any fees.  Merchants can easily see both the Interchange rates that make up the base price for processing and the mark-up the processor is charging.

However, the amount above Interchange your business will have to pay depends on all the factors mentioned above. 

Due to those multiple factors, it is not possible to put a specific number to our hard-to-place merchant rates. This is due to factors like industry specific compliance and underwriting conditions or ongoing monitoring requirements.  If we were to do that, we would be doing a dis-service to many businesses that could actually be classified at lower risk than others.

Instead, we consult each merchant's situation individually. Some high risk merchants only pay 0.25% while others may have to pay more.  If you would like to know how low our rates are for your business, call us today!  Our promise is to always be fully transparent and treat you with the professionalism your business deserves. 

There are instances where we are limited by bank policy and are unable to offer interchange plus pricing.  If this is the case with your account, we will offer you clear and simple "flat rate" pricing.  With this model, every transaction is billed at one flat rate for all your transactions.  In these cases, as with all our clients, we continue our pledge of transparency. We will never hide any rate or fee, so you are always clear on what you are being charged. 

Reach out to us – we don’t bite and we never pressure! But we are always happy to consult with you.

Another common question merchants ask is:  “Are your services domestic or offshore?” 

Yes, we do offer off-shore processing for those merchants who need it.  However, for the best rates, fees, terms, and payout options, most merchants prefer to work domestically.  B.I.G. works with dozens of acquiring banks, both domestically and internationally. Which means that whatever option works best for your business – we have you covered!

Let's take a look at both options.

Domestic high risk merchant accounts, a high level review.

Domestic high risk processing banks are simply acquiring banks that have a higher risk tolerance than those providing traditional merchant accounts. 

Due to the additional risk and compliance requirements, these banks must employ specialized teams.  At the core of the team are highly experienced underwriters that are well versed in risk management and fraud compliance.  They also employ compliance staffing that works consistently with federal agencies (such as the FDA) to ensure that their policies are compliant. 

High risk banks also have teams that provide persistent ongoing monitoring of both transactions and websites to quickly identify potential fraud or non- compliance.  In many cases, they will also employ third party compliance auditors to ensure that they are maintaining compliant portfolios. 

Because of the increased compliance and cost to maintain higher risk accounts, they do cost more when it comes to processing fees.  However, other than understanding and mitigating risk, these merchant accounts work exactly like traditional merchant services.  And, more importantly, they offer all the same benefits.  With B.I.G.'s domestic high risk merchant services, you can expect daily deposits, powerful gateways, fraud prevention tools, and charge back prevention programs - when needed. 

High risk merchant types have unique payments challenges. It is imperative that high-risk business work with a merchant account provider with the expertise and connections to help them succeed. This will enable them to navigate the complex underwriting requirements, compliance issues, and the preferences of the many domestic high risk acquiring banks to obtain a reliable merchant account.

Without an experienced and credible service provider, you could end up paying way too much, risk getting placed with the wrong bank, or even have your funds frozen!

It's important for merchants to understand that high risk merchant services require a bit more work than a traditional merchant account. That way, merchants know what to expect and are prepared for the process. Here are some pointers to make the process quicker and easier!

1. Vet the merchant service provider
   • Before ever applying for an account, be sure to vet the provider. This is an important step.  They will have access to a lot of your personal and sensitive information. Your business will depend on how they handle your information and the service they establish for you. 
2. Call your advisor and have a talk.
   • This sounds simple, but it can be a revealing step.  You need to be comfortable with your advisor.  Research the company and do some social media stalking…. Is this someone you want to work with?  Are they interested in your business or are they just interested in getting your business? 
3. Review the application package
   • Thoroughly review all items on the application before starting to complete it. If you have any questions or cannot provide something, call your advisor to discuss.
4. Only submit 1 application
   • DO NOT call 10 providers and fill out 10 applications. The fact of the matter is that many of these offices are not direct with the processing bank.  You may be filling out multiple applications for the same bank.  Additionally, many reputable offshore processing banks use the same system when underwriting an account. 
   • This could cause your account to get declined. When the acquiring bank sees multiple applications in the system, they view it as an increase in risk exposure. This may cause them to decline your account.  If you have found a reputable advisor to work with, they will likely have multiple options for you, anyway.
5. Type the application fields.
   • Type written applications ensure accurate information.  Be sure to fill out every section. Again, if you have any questions or don’t know the answers, call and ask.  Never turn in an application with empty fields that should have been completed.  This will delay the process.  Banks will not underwrite packages that are missing even 1 item.
6. Confirm signature requirements.
   • Ask if digital signatures are OK – most high risk banks still require a “wet” signature.
7. Put together a complete package.
   • Once you complete the application, assemble ALL the requested supporting documents.  We recommend that you scan and label each document separately. 
   • When you label them, name them to match the “checklist” provided by the processor.  Separated and clearly labeled files will help ensure quick processing.
8. Turn in your complete package in 1 single email, secure cloud link, or FAX.

Certain merchant types and situations make an offshore high risk merchant account necessary.  After many years of working with dozens of processing banks in just about every country, we have created a trusted network of offshore solutions. 

International merchant services often have a “shady” or scary connotation for business owners.  Most assume that they will be scammed or robbed of their money.  Although not unheard of when working with banks in other countries, it is by no means commonplace.  However, it is safer to work with an experienced high risk provider domestically.  One that has seen both the good and the bad side of working with offshore processing banks.

If your business has run out of options or needs an offshore merchant account, here is what you need to know.

Questions to ask your offshore merchant account provider

Before you ever complete an application and hand your personal information over to an offshore processor or broker, there are some questions you should ask.  More importantly, this is information you should understand and be able to verify all the answers to.

• Where is the bank located?
• How long have you worked with this solution?
• Why do you like this solution?
• How often and when will I receive payouts?
• Have there been any gaps in regular payouts? Why?
• Do I have to establish an offshore corporation? Will they do this for me?
• What are the set-up costs?
• What reserves are required? And what are the terms?
• What card types do they accept?
• Where will my transactions be authorized?
• Can you provide me with a comprehensive list of ALL rates and fees?
• What gateways do they work with?
  
  

Expect a very comprehensive application package.  Most reputable offshore processing banks have very strict underwriting requirements.  This is a good sign. While it may seem like a hassle, their thoroughness shows they're taking steps to protect both themselves and you.  To ensure success, follow the same best practices when applying for an offshore high risk account as you would with a domestic high-risk account.

Consider the following best practices:

1. Though you may truly be in real need of an account ASAP – DO NOT complete multiple applications.
   • Most reputable offshore solutions maintain a comprehensive communication network of active applications.  When a bank sees multiple applications in the system, most will decline the one in front of them.  There's also a good chance your application submissions could be for the same processing bank.
2. Review the full application especially the terms and conditions.
   • If there are no terms and conditions – ask for them before moving forward.
3. Review the supporting document list
   • Take note of any items that you cannot provide. Ask what they would like instead and if it will be a problem for your approval.
4. Complete every section thoroughly
   • If there are any items that you do not know how to complete, take notes and review with your advisor.  It is very important that your application is complete upon submission or it could severely delay or even prevent an account approval. 
5. DO NOT try to hide any information
   • It is always best to be above-board with all aspects of your business. Eventually, any hidden information will come to light.  This can cause unannounced account closure and seizure of funds.
6. Assemble the entire package
   • Make sure to gather and scan ALL requested items. 
   • As you scan the documents, clearly label them in the same manner as the checklist provided by the bank.  This will help ensure that your package is promptly processed.  Packages that reach underwriting, which are not clearly labeled, tend to be processed much slower than clear and complete packages.
7. Turn in your entire package in one submission.
   • Providing the entire package clearly labeled and in one submission will also increase the chances of quick review and approval.

How long does offshore merchant account approval take?

This is a tricky question.  Approval time will largely depend on two things: the processor you're applying with and your business type and products.

Often applications can be processed very quickly and you'll get account approval in just a couple days.  Certain products and situations, however, could require additional underwriting and diligence that cause it to take up to 10 business days for your international high risk account approval.

Can I use the gateway of my choice?

This is a common concern when processing through an offshore merchant account.  The simple answer is – usually not, but, occasionally yes…. 

Integration is highly dependent on the size and security requirements of the processing bank.  Most offshore banks will require that you use their (usually proprietary) gateway.  This is because it gives them full control and oversight into the transactions and security of the gateway.  In most cases you will need to integrate to their gateway through API.  However, most will have tech support and or documentation to assist you in the process.

Your offshore account's been approved.  Now what?

Congratulations! Now you can begin accepting payments for your goods and services. But don't think you can just set it and forget it.

The first few months of payment processing with an offshore provider require careful monitoring. Just as with any merchant account, pay close attention to your statements.  Set aside time each month to review your statement for any inaccuracies.  Compare the rates and fees to previous months' charges to make sure your terms have not changed.  Keep close track of your reserve account (if required) and make sure you understand the terms of repayment.  Anytime you find a discrepancy, call your representative and have it explained.

One easy way to accomplish this is to make a simple spreadsheet to track the major factors of your account, including:

• Reserve account – Amounts held, total on hold, date(s) of release
• Effective rate – Total rates and fees divided by total sales and multiplied by 100. This will give you your effective processing rate, has it increased month over month?
• Wire fees, monthly fees, and annual fees.
• Have there been any delays in funding? Was there a good reason given?

How will offshore payment processing impact my customers?

When using an internationally based processing bank, it is possible that website transactions will be authorized in that country.  In other words, if you are working with a bank in the EU to process transactions for your US based business, those transactions will look like a purchase is being made in the EU.  This can cause confusion for your customers, which could potentially cause them to abandon their cart.  Also, occasionally, an international approval request can cause transactions to be flagged or declined by the customer’s bank. 

There are many best practices that you can take to lower the number of declined transactions and shopping cart abandonment.  Clear communication and sales support are the most important.  We are happy to assist with some great ways for your business type to best approach your checkout process.

Whether you are in need of a domestic or offshore high risk merchant account, we have the B.I.G. solution! Here are just some of the industries we specialize in:

So what is the B.I.G. difference?

Interested in a chargeback prevention program?

Bankcard International Group offers charge back prevention solutions

These programs are very effective at assisting high risk merchant account holders to manage and prevent charge backs before they happen.  Many of our high risk or hard to place merchants find these programs useful.  Online merchants tend to see more chargebacks than other merchant accounts.   Just ask us for the details.