Banks classify merchants as high risk when the business is associated with a particular type of industry. Certain industries have a greater likelihood of chargebacks than do others.
The potential for more chargebacks increases the contingent liabilities of the bank. Even if your business has a proven history of low chargebacks, you will still be classified as a high risk account if you fall into high risk industry classification categories.
Many banks will not accept high risk accounts at all. Since fewer banks are willing to accept the accounts, basic economic laws of supply and demand come into effect. The banks that will accept the accounts charge higher rates.
For high risk businesses whose customer base is primary within the US, establishing a US account is generally preferable to going offshore. Settlement times are quicker. Approval times are faster. And rates are lower than offshore payment processing.
Although there are fewer banks that accept high risk accounts than standard risk, there are still many good solutions domestically. It is therefore often prudent to investigate domestic processing first.
There are many reasons companies consider offshore merchant accounts. Some merchants have been advised by their business consultants to go offshore. Still others have a large base of international customers.
Others are compelled to go offshore because of nature of their business. Banks in other parts of the world have different underwriting guidelines that can make it easier to get approved offshore than domestically.
And sometimes companies simply want to diversify processing among different jurisdictions for redundancy and backup purposes.
In addition accepting card payments, businesses can increase sales by offering alternative payment options. The more ways customers have to pay you, the more orders you will receive.
For companies with US customers, adding echecks to the checkout page can increase orders by up to 20%. Echecks let you capture sales from customers who don’t have cards, are maxed out on cards, or simply prefer to pay with a direct debit from a bank account.
Businesses with international customers benefit from adding a local bank transfer payment option. Local bank transfers are a popular way for Europeans to pay online. And are also used by buyers in Australia, Mexico, Central, and South America.
High risk merchants face challenges obtaining payment processing accounts. Yet many opportunities are available for you to obtain high volume capacity processing at attractive rates.
Establish domestic high risk processing. Or take advantage of international merchant accounts to diversify processing and mitigate risk. And add popular alternative payment methods to increase your sales.
Are you a high risk merchant that wants to diversify your payment processing accounts?