Several factors could lead your business to be considered high risk. Some of them include a high chargeback rate, government regulation, and public perception. Most businesses that are classified as such do not know they are. They only find out when they start talking to payment providers to obtain a merchant account for processing payments. High-risk merchants face several problems, the most obvious being facing difficulty working with traditional banks for merchant account approval. So, what can high-risk merchants do to overcome this challenge?
Be Open and Honest
It is important to be open and honest with the merchant account provider. This means disclosing the goods and services you sell. You should also be open about your credit, especially if it is not great. Do not forget to tell the payment processor about any debt you or your business holds.
Being honest and open like this is important because the bank underwriting the merchant application will go through your history and that of your business. They will find all of these things out on their end, and if you did not tell them the truth, they might start wondering what type of partner you will be in the future.
Fully disclosing anything the payment processor and partner should know gives your submission the best chance of being approved.
Work with Specialized Merchant Account Providers
If you think the process of applying for a merchant account will be a hassle for you, you should consider working with businesses that offer high-risk merchant accounts. An experienced high-risk merchant account provider knows what banks you need to work with, and they will work with you to find one and ensure the lowest rates for your business.
They also work with businesses that need special consideration due to the nature of their products and services or how the business is built and structured. Lastly, they will help you stay ahead of changing regulations so that you keep providing your products and services without interruptions.
Provide Evidence of Financial Security
A history of robust and stable financials can go a long way in helping with the approval process. Your banking statements, financial statements, and tax returns are all crucial pieces of evidence that can help support your claims.
All the financial documentation you produce should be in order and up to date so you can provide it easily when asked for it. Many merchant account providers want to see consistent positive growth and steady financials, as these prove that your high-risk business can deal with any financial setbacks.
Provide Payment Processing History
When setting up a merchant account, you will also be asked for your recent payment processing statements. Merchant providers want this data to confirm that your business has a solid history of processing payments. Inconsistent figures are considered a red flag, as are many chargebacks on your accounts.
Businesses categorized as high-risk face challenges when setting up merchant accounts. The number of merchant account providers may be limited for them, and the requirements for approval are very strict. Fortunately, the tips above can make it easiest to overcome this hurdle.
