Few Important things you need to know about High Risk Business Loans

There can be multiple different reasons as to why a merchant could be labeled as “high risk” by the processor. There are certain superficial factors which mark the characteristics of the clientele or business. The nature of industry is one of them. Besides, various other aspects related to the business practices of the merchant are also taken into consideration.

If you are running an online business where the risk of charge-backs are higher, and you want to process different types of credit card transactions, this is where you would require a high-risk merchant account. What exactly is a high-risk merchant account, and how could you determine that you need one?

The services and products which you are dealing in can also portray your risk profile in a bad light. Here is a list of a few high risk industries and products which can raise areas of concern for the processors

  • Telemarketing or VOIP
  • Online Casinos or gambling
  • Drug or Pharmaceutical stores
  • Adult products and services
  • Forex or Bitcoins trading
  • Airline Tickets
  • Magazine Subscription
  • Dating Services
  • IT Hardware or software
  • Electronic Cigarettes

High-Risk Factor – What is it all About?

Merchant account providers and banks consider a business to be of high risk nature due to various factors. Here are some of them

  • Higher level of charge backs
  • Cancellation of the transaction, made through credit card, by a customer after the payment has been received by the merchant
  • Returns and refunds
  • Frauds related to credit card transactions.

Apart from these, there are some other factors which are carefully looked into by the banks. They would check if the company has a good credit history, besides the nature of industry is also taken into consideration, where the probabilities of different types of accidents are taken into consideration.

Who Require a High Risk Merchant Account?

Talking of high risk business, travel industry can be cited as an example. The reason as to why it has been categorized as “high risk” is because the chances of cancellations ate quite high. This results in refunds of large numbers along with the numbers of customers who file charge backs. Some other examples could be Forex trading, gambling, adult websites and others.

Higher the chances of charge backs, greater would be the risk for a business. Therefore, the what matters at the end of the day are factors like processing history, where the charge back ratio needs to be below 0.9% of the total transaction and processing history of the business.

Do you run any business on any of these kinds? If you do, in that case, it is absolutely essential for you to opt for the services of a high-risk merchant for accepting online credit card payments.

What are the Benefits and Disadvantages Associated with High-Risk Merchant Account?

When it comes to disadvantages related to high-risk merchants account, one of the very common one is the fact that you need to pay higher processing rates and fees, due to the fact that high level of risk is involved. It also needs to be mentioned in this context, that there could be occasions when bank could ask for a reserve.

What do Banks look for in a High Risk Business

There are a couple of areas which are required by the bank for analyzing, When it comes to a high risk business. Here are some of them

  • Financial Details of the Business
  • Plan of the Business
  • A comprehensive details on account receivables
  • A comprehensive details on account payables
  • Audited financial statements
  • All the personal financial details of the owner
  • Copies of previous tax returns
  • Insurance details
  • Future ration agreements

The process for applying high risk Merchant Account is quite simple. Get in touch with iPayTotal to get instant approval on Merchant Account.

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