Businesses that are considered high risk businesses are not able to get approval from financial institutions to get a merchant account. This is due to the high risk nature of their businesses which makes it hard for them to get a merchant account and therefore unable to have a relationship with a financial institution.
When this is the case, these types of businesses that are considered high risk have to settle for high risk merchant services to be able to get a merchant account for their business. So which are those businesses that need high risk merchant services? Here is a list of highly recommended merchant services:
Gaming Businesses – Gaming companies are considered high risk due to various reasons. First is the fact that they are high volume turnover businesses which is considered a risk by credit providers. Most of them also are usually based off shore where gambling is allowed which might make them good for conduits for money laundering.
Another reason gaming businesses are considered high risk is because they offer high risk products which can lead to many refunds increasing the liability on the side of the processor. For this reason many processors would rather not offer services to gaming businesses.
Gaming businesses are also the best solution for high risk merchants. They are at high risk of insolvency which also would affect the processor a great deal. The types of gaming businesses considered to be high risk include: online casinos, poker sites, online gaming sites and mobile gaming sites.
Adult Entertainment Companies – Adult entertainment is the other kind of business that is considered high risk. This is due mainly to the legality of the business in some jurisdictions. For other people it is just a matter of taboo for associating with businesses that deal with sex. They consider sexual issues a taboo that they should not associate with their businesses.
Medical Marijuana Businesses – Although some states have legalized use marijuana many others have not yet. This coupled with the fact that many consider use of cannabis to be illegal is a major setback in medical marijuana businesses getting merchant accounts.
There are many financial institutions even in the states where marijuana has been legalized that do not offer merchant services to the medical marijuana businesses. Those that have agreed to offer the services though might be experiencing an unprecedented boom as many businesses join in the medical marijuana business.
Marijuana businesses also face other hurdles like intellectual property problems, brand protection, high taxes and other such hurdles that increase the risk of the business.
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Subscription Service – Subscription services are those whereby the client gets goods delivered to their doorstep at regular intervals and they are charged for those goods. Although the subscription services are regular and therefore attractive for merchant providers, the problem arises when the customers want refunds.
These might happen regularly in the subscription business and especially when the customer might have forgotten that they had an active subscription. Such customers can challenge the subscription to get their money back.
What is the Solution for Such Businesses?
For these high risk businesses unable to easily get a merchant account, all is not lost. Such businesses need high risk merchant services to ensure that they can get a merchant account. The only downside to these services is that they cost more than the usual merchant account.
However the benefits of paying for the extra significantly outdo having to give some more money. The business is able to get a credit line and charge through merchant accounts. Shopping for a high risk merchant business can be a daunting task especially when the business is new and the sales representative is inexperienced.
It is imperative that the business engages in finding the best merchant services provider. There are a few banks that allow high risk merchant accounts but they have many agents. Not all agents working for the bank are the same. Some will be rated well while others will not. It is imperative that the business ess seks for the best merchant to deal with.
The agent the business deals with will determine the services received and even sometimes how the account will be charged. While applying for the high risk account, the business should be honest in their dealings stating all the products and services that they engage in. This will create a bond of trust between the high risk merchant services provider and the business.
High risk merchant services are therefore an integral part of any high risk business. They are the only way that a high risk business is able to get a merchant account for their financial transactions. High risk businesses are also profitable and therefore running such an account for them is easy and essential.