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High risk merchant accounts traditionally refer to industries such as gambling, adult entertainment, online dating, forex, multi-level marketing and travel. However, it also includes online subscription businesses, mail order telephone order (MOTO) businesses, high sales transaction amounts, high daily sales transaction volume along with delayed merchandise fulfillment. Instabill receives inquiries from all of the above business types and places them with merchant banks who understand their business and its payment needs.
We offer no guarantees, but we promise to hear out your case and exhaust our numerous solutions.
What Do High Risk Merchant Accounts Mean?
Merchants are deemed high risk for a variety of reasons:
Trading in the e-commerce space: Transactions where the credit card is not present at the time of sale is a ‘high risk’ indicator. E-commerce transactions are more prone to fraud, chargebacks and identity theft, which puts banks on edge.
Industry type: Instabill began in the U.K. as a provider of merchant accounts for the industries of adult content, online dating and online gambling, three industries that some banks deem risky for a number of reasons. An example would be a consumer who subscribes to an online dating site for six months, stops the subscription unsatisfied, and files a chargeback. Episodes such as this happen frequently.
It’s not just industries that deal in high chargeback rates. High volume industries, such as nutraceuticals or multilevel marketing, also put banks on guard. So do industries with high ticket items and services (such as airline tickets), especially those with delayed payment settlement.
High risk merchant accounts merely indicate that banks feel they have to take precautionary measures against the things that can go wrong with a business. Instabill, fortunately, has a wide variety of domestic and international banking partners that welcome such industries.
High chargeback industries: Certain industries are known for high chargeback rates: tech support, online gambling and gaming and travel-related businesses among others. In many cases, a bank will impose a rolling reserve on your merchant account.
Imperfect credit or processing history: We understand that launching a business is a gamble, and that sometimes businesses go under for whatever reason. When such a merchant is seeking a second chance, a bank will deem him/her as a risk, and they may pay slightly higher rates as a result.
Business model: Do you offer free 30-day trials for a product? While trials are an effective marketing tactic, they also often result in chargebacks, which increases risk level.
Are approvals for high risk merchant accounts more difficult?
Many merchants may support this premise. Others may claim that it is a matter of being a better business person or customer service representative. Let’s settle for a little of both.
One reason high risk merchant account approvals may seem harder to obtain is because the major card issuers — Visa and MasterCard especially — are cracking down on the amount of chargeback disputes. Back in November of 2015, Visa announced it was reducing its chargeback and fraud threshold from 2 percent of sales or 200 chargebacks per month to 1 percent and 100 per month. Effective April 2018, Visa announced its new, two-channeled chargeback dispute protocol, aimed to reduce the number of chargebacks that go to the dispute level.
As a result, acquiring banks are now turning away merchants in high-chargeback industries — for example, tech support, nutraceuticals and those subscription and recurring billing-based — for fear of running afoul of the new standards set by the major card brands.
We prefer to see the issue as more of a longterm solution, than a short term problem for high risk merchants. The card brands diminishing tolerance for chargebacks and fraud is forcing e-commerce merchants — especially those in high risk, high chargeback industries — to become better business people. Merchants nowadays have no choice but to be proactive against chargebacks and fraud and to bolster their customer service efforts.
Solutions for High Risk Merchants
While searching for the best high risk merchant account providers can be tricky, Instabill is partnered with many international and domestic banks that provide solutions for high risk businesses. We obtain high risk merchant accounts for our clients on a daily basis.
Our merchant account managers are available Monday through Friday from 8 a.m.-6 p.m. at our Portsmouth, NH USA office. Describe your business to us and explain where your geographically targeted customer base is what their payment needs are. Our merchant account managers may offer additional payment options that will increase your sales.
Let’s have a conversation at 1-800-530-2444 today.