Why Payment Processors Suspend High Risk Merchants

Whether your business is high risk or not is determined by a bank’s underwriting guidelines. Different financial institutions calculate the risks associated with your business differently. Basically, the high risk nature of businesses is caused by chargebacks and fraud. The more your business is associated with higher rates of chargebacks, the greater the risk.

Why Your Business is High Risk

One of the main factors determining the high risk nature of your business has to do with the industry you’re operating in. Some of the high risk businesses include:

  • Adult
  • Airlines
  • Bad Credit
  • Credit Repair
  • eBooks
  • Electronics
  • Gaming
  • Nutraceutical
  • Tech Support
  • Telecom
  • Travel
  • Warranty

And more.

The other factor has to do with the rate of chargebacks and disputes. Lots of digital products are associated with higher rates of chargebacks, because they’re easier to scam. When it comes to chargebacks, they can result in financial damage, which again puts your business at risk.

As a result, traditional banks and financial institutions prefer to stay away from high risk businesses and suspend this type of merchants.

Merchant Account for a High Risk Business

If you need a merchant account for your high risk business, you should turn to a reputable high risk credit card processing company that has years of experience in the high risk field. There are experienced and reliable payment processors that have helped thousands of hard-to-approve merchants get a high risk merchant account without challenges.

When it comes to rates, most industries start out at 2.99%, but certain extremely high risk industries start at 3.95% such as debt consolidation. Offshore accounts are more expensive and are normally in the range of between 5-9%.

With a true professional in the field, you can enjoy exceptional terms and rates for your high risk merchant account. However, be aware that rates may vary and are subject to change. So, you’d better consult with the processor you’ve chosen to work with to get the most accurate rates for the day.

Finally, if you’re interested in a PayPal merchant account, you’d better turn to a reputable payment processor that specializes in the high risk industry since PayPal can close your account if it considers your business high risk.

Author Bio: Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2010. His passions include writing/producing music, and travel. eMerchantBroker is America’s No. merchant account for a high risk business company, serving both traditional and high-risk merchants.