When dealing with credit cards there is always a risk of fraud. No matter how you accept cards, either that be swiped debit or credit keyed in online, there is always a risk of illegal activity. It’s a part of the game. However, since financial services can be a very risk-averse industry, some business are deemed high risk due to historical data, which requires a business to obtain a High Risk Merchant Account.
There are some major factors that play into whether or not a business needs a high risk merchant account. Mainly it breaks down into two factors: Reputation and sustainability.
Now reputation can go both ways. Having a bad reputation can label you high risk or being too well known. I know, your brand can be too famous. It’s actually about how much traffic you drive online. Someone like Amazon.com has a lot of online sales (duh) and their risk for fraud is drastically higher than Bob’s online bait and tackle.
More specially with bad reputations, your account can be placed on the dreaded MATCH List. The Member Alert To Control High-risk Merchants is a list created by MasterCard to keep track of merchants who have had their merchant accounts terminated. It’s bad news if you are on this list but there is hope. Merchant Maverick has a great article on this topic.
Sustainability can play a major role in how your business is treated, industries such as marijuana dispensaries. While these owners could have amazing credit histories and low history of charge backs, but since their industry could become illegal again tomorrow, they are high-risk.
Similarly, for fire arms. Laws and legislation for fire arms changes constantly. Legislation like the Federal Assault Weapons Ban have had major impact on a weapons manufacturers or sellers.
So, what can you do? Being a high-risk merchant doesn’t leave much room for negotiation but you are not powerless. You can look for high-risk specialists that only deal with risky merchant accounts. Or you can find industry specialists. These merchants will sometimes not treat industries as high risk. For example, we at Blue Dog don’t process firearms, construction contractors, or pawn shops as high risk.
Well I hope I cleared some things up. Being a high-risk merchant isn’t the end of the world. Just be careful not to end up on the MATCH list!