Thursday, April 26th, 2018
If you are in the business of repairing credit, offering adult entertainment, or any other business considered high-risk to banks, be prepared for a bumpy ride when you go to obtain a merchant account.
Any business, especially those that accept mobile, online, or phone payments, that wants to accept credit card transactions needs a merchant account and a payment gateway. This would be simple enough if you didn’t work in one of the many industries that financial institutions have dubbed “high-risk.” Businesses get slapped with that label when they handle mostly online transactions, have a history of excessive chargebacks, above-average ticket sales, unusually large volumes of transactions, and those in highly regulated industries, such as gambling and electronic cigarettes. Banks also turn away businesses with poor or low credit scores. So, how does a business that falls into one or many of these categories get a high-risk merchant account UK? You go to a merchant account provider who knows and understands high-risk credit card processing.
Standard vs. High-Risk Merchant Accounts UK
Before you begin your search, it is best to know the difference between standard and high-risk accounts. Since processors are expected to shoulder more risk, with a high-risk account you can expect:
- To pay a set-up fee
- Have a minimum monthly number of transactions
- Higher transaction fees
- A longer settlement period
- To set up a rolling reserve
- To pay an annual fee
Those who are having trouble getting a high-risk merchant account in the UK may think that a better option may be to set up an offshore merchant account. This is an option, but it is one that also has a lot of downsides. You may run into jurisdictional issues and legal issues, as well as much higher rates.
The Better Approach
Prior to applying for a high-risk merchant account in the UK, develop an accurate, comprehensive business plan that shows that you have enough cash flow that more than meets all of your financial commitments.
Offering to submit a personal guarantee is another good idea. A personal guarantee is an unsecured written promise from a business principal, guaranteeing payment in the event of a loss or another issue with the business not paying. Since this is not secured, any payment is not tied to a specific asset. Taking this action not only cuts down risk to a processor, it shows your personal commitment to the business and its future success.
Also, make sure your finances are in order and that you have a good credit score.
Important Questions to Ask When Applying for a High-Risk Merchant Account UK
When you begin to shop around for a provider and are discussing options, be sure to ask:
- What are the monthly fees?
- How long are deposits held?
- What are some of the other fees charged? Are there gateway, authorization, chargeback, return, early termination, and point-of-sale software fees? Typically, what do those fees add up to each month?
- What are your customer service practices? How long does it take to get a representative to reply to questions and problems?
- How long is a contract and is there a fee to terminate a contract?
When It’s Time to Make a Choice
If you move forward with a merchant account provider that understands the challenges associated with high-risk businesses, you will be in good hands. When you need dependable credit card processing in the UK, turn to Best Payment Providers. In addition to offering a free consultation that includes reviews of contracts and fee schedules, it ensures you have a seamless integration process. Applying online is simple and easy.
Topics discussed in this article:
- High Risk Merchant Account UK