Why Including High-Risk Merchants in Global Payment is a Must

Wednesday, October 13th, 2021

As the payment industry continues to evolve rapidly, it’s important for high-risk merchants to be a part of that growth. The inclusion of these merchants in global payment is critical for many companies – and entire industry’s – future growth and success. One way high risk merchants are achieving this is through high risk merchant accounts.

What is a High Risk Merchant? 

What is a high risk merchant? Banks and merchant account providers consider a business high risk if they experience a high level of chargebacks and fraud. Chargebacks are charges that are returned to the card used to make a purchase after a customer successfully disputes that purchase. Businesses that receive credit card payments and refunds and returns can also get pushed into this category.

Factors that Make Businesses High Risk

Payment processors and financial institutions ultimately make this determination (high risk) by considering several different factors, including the nature of the business, its financial history and its location. Typically, any business with a tendency for fraud occurrence or chargebacks is quickly pushed into this category, making it hard to secure funding and payment processing services. Here is a quick break down of the factors that influence this decision:

• Business sector. How other businesses in your sector are doing plays a significant role in how financial institutions and payment processors will view your company. If the risk of chargebacks for your industry is low, you shouldn’t have much trouble securing payment processing and funding. If, however, the risk is high, you’ll likely be pushed into the “high-risk” category.
• Financial stability. How stable is your business’ financial situation? Is cash flow strong? Is your business showing overall profitability? Keep in mind your business can seem profitable, yet struggle maintaining cash flow. This is one of the biggest factors a lender will consider.
• Credit history. Where is your credit history sitting these days? What does it look like on paper? If a financial institution sees a higher credit score, it will automatically lower your risk in their eyes and increase your chances in securing lending and payment processing.
• Processing volume. On average, how many client orders does your business process? How do your sales and business transactions look per year? In the eyes of lenders and processing providers, a business that handles more than five million annually is more susceptible to risk – making them less likely to want to work with you.
• TMF list. If your business finds itself on this list, you will be all too acquainted with this factor. A terminated merchant file (TMF) is a business that has lost its previous business account due to a high volume of chargebacks, placing it on this list. Being on this list tends to automatically push companies into the high-risk business category.

How to Get a Merchant Account as a High Risk Business

As you can see, the inclusion of high risk merchants in global payments is incredibly important. Many industries and business types are simply pushed into this category because of their nature, at no fault of their own. Startups also find themselves in this situation due to limited financials and business history. 

If your business ticks any or all of these boxes, you might be wondering what the next step is. How can you secure funding and secure payment processing with such a label? The answer lies in partnering with a high risk provider. These companies specialize in providing services that are tailored to each business’ unique needs, including high risk. Browsing the many reviews and updates from bestpaymentproviders.co.uk can help you discover the payment provider that not only meets your needs, but also has the reputation your business deserves.