3 questions that catch merchants off guard when seeking high risk credit card processing

3 questions that catch merchants off guard when seeking high risk credit card processing

We once read about a study that found that more than 55 percent of communication is nonverbal, signs such as facial expressions, gestures, posture, and pauses in speech. For us, the vast majority of our business — offering high risk credit card processing — is done over the telephone. But we know when we’ve caught a prospective merchant off guard when we’re familiarizing ourselves with their business model.

We certainly don’t mean to catch merchants by surprise; quite the opposite: We want to make the application and approval process as seamless as possible. We need merchants’ help, however, in the form of straight answers and transparency, enabling us to present your business to our acquiring banking partner (which does its own KYC tasks and underwriting).

So if a merchant is less than transparent with us — for example, denies that s/he is on the MATCH list when indeed they are — our acquiring bank partner will find out if we do not. Thus we ask all prospective merchants to be transparent with us. In return, we will do our best to find a solution for them.

So that we don’t catch merchants unprepared during our pre-application process, here are three questions to expect from us:

1. Why do you need high risk credit card processing?

There are several different responses we get when we ask a merchant why they’re searching for a new or added merchant account. Think of Instabill as a ‘gatekeeper’ of sorts for the acquiring bank.

  • Brand new/startup business, seeking a high risk credit card processing solution.
  • Merchant is seeking a better rate/lower fees from a payment service provider.
  • Acquiring bank is no longer providing merchant services for their industry (this is common in the high risk space).
  • Merchant had been shut down — perhaps due to high chargebacks or instances of fraud — and placed on the MATCH list.
  • Stern volume restrictions on original merchant account; opening a second merchant account to divert volume or cut chargeback rate.

2. Where do you, the owner, currently live? And where is your business registered?

This has become a make-or-break factor when looking to obtain high risk credit card processing over the last two years. In Europe, for example, businesses must have a physical presence with a staff and a business bank account with a bank with the European Union. Gone are the days when merchants could register their business in an EU nation with no physical presence there.

Additionally, if merchants are seeking one of our check solutions — ACH payment processing, echecks or virtual checks — they must be residents of and have their businesses located and registered in the U.S. or Canada.

3. What does your business do exactly?

Several years ago, we found a high risk credit card processing solution for an international merchant that rented and sold industrial-sized waste dumpsters to construction and demolition businesses. It was an easy process — the merchant had good processing history, furnished us with the necessary KYC documents and had capital behind his business.

What the merchant didn’t know was that we continue to monitor transactions and check in with our merchants after the merchant account approval. Within a week of our dumpster merchant getting his approval, we telephoned his business with a random question. A woman answered the call, thanking us for calling ACME Tech Support (not the business’s real name).

Realizing it wasn’t a case of dialing the wrong number, we asked the woman to explain the tech support side of the business, to which she replied the business performs a number of services.

With that, we telephoned the owner and cancelled his merchant account — before he took any transactions — to his dismay.

We touched upon how important transparency is in the merchant account approval process. When applying for high risk credit card processing, PSPs (such as Instabill) and acquiring banks must know precisely what a merchant is selling at all times. For example, a nutraceutical merchant cannot add products to their website without checking with their acquirer first because some products add a higher degree of risk.

By providing credit card processing for a high risk business, an acquiring bank is taking on a degree of risk — the risk of losing money due to such risk. Thus, banks and PSPs need to know exactly how a merchant is earning revenue.

Our best advice: Just be transparent with us

Instabill has offered high risk credit card processing services since 2001 because it believes that all legal, legitimate merchants and businesses deserve to accept the most convenient form of payment — credit cards.

We are a proponent of high risk industries and, behind a large network of domestic and international banking partners, will exhaust our network to find a an e-commerce merchant account solution.

Our merchant account experts offer live support at 800-530-2444 from Monday through Friday, 8 a.m. until 6 p.m.

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