Your Guide to a High Risk Merchant Account

Are you looking for a bank account for your business finances where it is already high at risk? A high risk merchant account in New York is a bank account for businesses that are considered to be financially unstable due to various reasons, including being at a high risk for fraud or chargebacks. This could be because of financial, legal, or operational hurdles a business might be facing. The most common high-risk businesses in the industry are considered to deal with online gaming, gambling, cryptocurrency, etc. Building a reputation as a high-risk business owner can be a difficult task. 

Characteristics of High-Risk Businesses

Let us take a look at the main characteristics that most of the high-risk businesses share. Certain industries earn their reputation as high-risk industries because of their frequent chargebacks, a high level of fraud, or refunds. Businesses dealing with international sales are also considered high risk by merchant service providers. Other than these, businesses with subscription-based services or bad credit history are also considered to be high risk because of more exposure to chargebacks or lack of financial stability, respectively.

However, the high-risk businesses that most of the service providers hesitate in dealing with happen to be new or unestablished businesses. This is because they don’t have a proven record or portfolio to display and pitch to the service providers, especially when seeking a high risk merchant account in New York.

How Can High-Risk Merchant Accounts Help?

Having the “high-risk” label over your business can be quite discerning and disconcerting. You might have to face longer application processes, higher payment processing fees, higher chargeback fees, and volume caps in credit card payments. To save you from all the trouble, we came up with a high risk merchant account in New York guidelines for accepting credit and debit card payments.

You should have a healthy cash level for your business to showcase it to your service providers. This helps you convey a picture of financial stability, lowering the risk factor in your payments. Reducing your chargebacks can also be helpful in taking off your reputation as a high-risk business. A few reasons for chargebacks can be mismatched product descriptions, fraudulent activities, incorrect currency, prolonged delivery times, etc.

Other than these, you should be transparent about your business activities, products, and services. Keeping necessary deliverable information to yourself can cost you a lot of money and customers, and even your credibility. To make sure your business maintains its credibility in the eyes of your service providers, you must follow the guidelines of your payment processors as well. Hence, you should be careful about being flexible and following their recommendations about lowering risk rates, especially if you have a high risk merchant account in New York.

How to Find Your Service Provider?

Choosing the right service provider for your business can also be a hassle if you don’t have the correct guidelines and factors to consider. We will tell you a few important factors that you must consider before going with a merchant service provider: First of all, most service providers do not have their high-risk merchant accounts information on their websites or socials. You will have to book an appointment with them and get prepared plans customized for your business according to its risk rate and factors.

Not all service providers offer high-risk accounts for businesses that are specific to industries. Here are a few payment processors that are likely to provide high risk merchant accounts in New York services to you: Durango Merchant Services, Payment Cloud, Payline Data, Host Merchant Services, Soar Payments, etc.

If you are confused about how to choose the right service provider that will charge you the least, you should ask the following questions from your providers:

• The structure of their equipment costs
• Their processing costs
• Any additional costs or fees for payments
• The contract and its eligibility criteria
• Their offered reporting and statements
• If their equipment is PCI DSS compliant

With these clarifications and meetings with different providers, you can finally land on the ideal service provider for your high risk merchant account in New York.

Disadvantages of a High-Risk Merchant Provider

Since it is a risk for your service providers, they make sure to play safe while providing you their services. Here are a few disadvantages that you might have to face because your business is categorized as high-risk.

• You might have to face higher fees including setup fees, monthly charges, and transaction fees.
• Many high-risk accounts might require a rolling reserve, in which they will keep a percentage of your business transactions for a certain period in case of any potential chargebacks or financial losses.
• Your business transaction funds might not be readily available to you as compared to standard accounts, which may end up affecting your business’s cash flow.
• You might have to face stricter terms and conditions for your high risk merchant account in New York, leading to complex requirements and penalties in case of disputes.
• On top of all these, your business’s reputation as a high-risk business can affect your reputation among your partners as well as your competitors and leave you hanging by a thread.

Final Verdict

The above is your entire guide to check if your business lies in the category of high-risk businesses and how to overcome that. It also speaks about the factors you will have to face if you lie in that category and the maintenance of your business finances during the phase. With a proper strategy and the right high risk merchant account in New York, your business can navigate these challenges effectively.