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high risk payment processing

What Makes a Business a High Risk Credit Card Processing Account?

Ray Moorman

Running any type of business that processes credit cards can be a challenging task. But when your business is considered “high-risk,” finding a credit card processor becomes that much more difficult, as the company may be viewed as a somewhat dangerous investment. But what makes a company a high-risk credit card processing account? If a business matches any of these criteria, it may be seen as precarious for investors and credit card processors alike:

  •          High-risk industry – Certain business sectors are precarious in and of themselves, making it daunting for them to find a credit card processor that will back their company (1). Many of these industries are marginally legal or cause worry due to public image. Examples include: online gambling, sexually-oriented websites, brokers, e-cigarette distribution, debt collection, lotteries and travel clubs, among many others. If a company fits into any of these industries, it may have to work harder to find a payment processing partner.
  •          Offshore business – Since every country has its own requirements and understanding of what products and services best serve its audience, a foreign-based company is considered riskier (2). Although an offering may work with customers in one area of the world, that doesn't necessarily mean it will translate well to other regions. As a result, that product or service is considered more uncertain in terms of potential success.
  •          Poor finances – This is one of the major issues for high-risk merchants. A bad financial history automatically makes a company more dangerous for investors and credit card processing partnerships. Businesses that have a record of paying bills late, not offering collateral for a loan and a high rate of chargebacks, refunds, returns and credit card fraud may face complications finding financial partners (3).
  •          First-time entrepreneurs – The initial endeavor of business owners may be deemed a high-risk credit card processing account, as the leaders of the company have little to no experience managing all enterprise expenses and responsibilities. Startups themselves are naturally precarious investments for financial supporters, as they have a good chance of not making it past the first year. Having one or more executives with a prior history of running a company helps a business be seen as less dangerous in the eyes of credit card processors.

Falling into the high-risk credit card processing account category is not terribly difficult. However, just because a company is considered high-risk doesn't mean the enterprise can't find financial partners. 

  1. http://www.merchantmaverick.com/highrisk-merchant/
  2. http://www.entrepreneur.com/article/239022
  3. http://smallbusiness.chron.com/high-risk-business-723.html

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