High Risk Credit Card Processors And Their Benefits

By Justin Hedberg

When something is labelled high risk as regards credit card processing, one might think it is a bad thing. Actually, in many cases it is. The situation is however not as clear cut as it seems. For certain merchants, the cost of being high risk could be overshadowed by all potential benefits. When it comes to High Risk Credit Card Processors, it is important to understand what it involves.

For credit card payments to be accepted, businesses have to first and foremost obtain accounts with acquiring banks. This is a service whose cost is based on many factors. These include type of business, history of losses and the manner in which transactions are performed. Naturally, you expect fees to be higher for high risk ventures and that is why specialized payment processors are required. In most cases, processors avoid highly risky merchant accounts owing to perceived risks.

There are various benefits when doing high risk credit card processing. One main benefit is that it encourages global expansion. For merchants to make it in a global economy that is always expanding, it is important to realize there many benefits of high risk payments that will largely outweigh shortcomings. Normal processing options have a limit on transactions, which will negatively affect growth. For example, processors place restrains on lower risk merchants. Such merchants are not allowed to transact in multiple currencies. They might also be allowed to only deal with card-not-present transactions.

Such processors come with unlimited earning potential. The processors limit amount and type of revenue low-risk merchants will generate using credit cards. For instance, the low-risk merchants cannot offer recurring payments or sell certain services and products. A recurring payments model is able to become a sustainable source of growth in the long-term. Actually, most merchants will depend steady stream of incomes that can be created by installment billing. It is worth the expense.

Such processors will lead to increase in profits. There exist a number of services or products that credit networks perceive as too dicey and thus are not able to be handled well by low-risk dealers. With the higher risk dealers however, a business can sell virtually anything they want.

The higher risk processors come with non-serious charge-backs. While a merchant account assesses a lower charge-back fees, there is always a very strenuous relationship between a merchant and processor of credit cards. There is possibility that merchant accounts could be terminated since there is constant monitoring by the acquiring bank.

When the accounts are terminated, the business might have to look for high-risk accounts or stop taking credit cards. At worst, they may run out of business. With high-risk accounts, they are rarely terminated because of excessive charge-backs. Merchants may pay higher fines but longevity of business is never in danger. The ideal will still be to keep charge-backs low but there is never the need to panic.

There are many credit card processing companies which accept high-risk business types. There are those that specialize in clientele that are high-risk. Others on the other hand will consider high-risk segments as part of their overall scope of business.

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