Low Risk Vs High Risk Merchant Accounts

If you run a business that uses online payments, then you’ll understand the importance of a reliable payment system. Using a third-party merchant account provider makes it much easier and safer to process and manage online payments from all major cards, accept e-checks and streamline telephone sales.

If you’re considering signing up for an
account with a payment provider, you need to first assess whether you are a low
or a high risk merchant, as this will impact both your eligibility for certain
services and the fees you’ll need to pay.

Let’s take a closer look at what it means to
be a low risk or a high risk merchant, and the implications this could have for
your business.

What Do We Mean by Low
Risk and High Risk?

The risk in question refers to how stable a
business is perceived to be. Your risk assessment from a payment provider does
not focus as heavily on your personal financial situation, but on the stability
of your business.

A low risk company is one that can expect a
steady flow of cash and has been established for a while. Here are the main
factors that may contribute to you being classified as high risk:

• You’re running a
  business that is marked as high risk (see the list below for further info)
• Your business is
  relatively new
• Your business doesn’t
  generate a steady stream of profit
• You sell a product or
  service that is paid for long before the customer receives it (e.g. advance
  tickets for events or travel)
• You have a poor credit
  rating

As a business, your risk level result depends on which merchant account provider is assessing you. However, certain business types will automatically be marked as high risk. These include:

• Financial service providers - the world of finance is fickle, so financial
  services are deemed high risk
• Adult entertainment companies - continuous unpredictable changes to regulations
  mean the adult industry is considered unstable
• Rail and airline travel companies - a high risk business because of the extended period
  of time between the payment and the journey, plus the need for refunds
• Online gambling and gaming sites - an industry that is inherently prone to change and
  so is considered high risk
• Legal firms - prone to ebbs and
  flows in business so usually considered insecure

What This Means for
Your Business

You want your business to be regarded as low
risk because it maximises your chances of acceptance from a payment provider.
If you are considered a high risk merchant account, they may well reject your
request to open an account with them.

You may still, as a high risk business, be
eligible for certain services but these will likely be limited. You may also
have to pay additional fees to insure the provider against a potential loss.

Find the Right
Merchant Account

If you’re just starting out in business, or
you believe your venture to be high risk, you may still be able to a find
payment provider who will work with you.

Orbit Card Services are an established payment solutions provider who
offer both low and high risk merchant accounts. Get in touch today for a free
consultation and receive an answer within 48 hours.