What Is A High-Risk Payment?

There are two types of business owners who own low risk or high-risk credit card processing accounts. Higher risk account holders have a more difficult time getting approved for business. Learn more about how high-risk payments are dealt with in the credit card processing industry.


What Are High-Risk Payments?


A high-risk payment is likely to be denied instead of approved. This results in chargebacks or the return of funds to payers. The bank initiates this reversal of payment if there is a lack of funds or if the customer requests a refund. A company that receives many chargebacks or product returns is considered to be high risk.


Payment Processing Options for High-Risk Clients


Payment problems should not prevent any company from continuing its business operations and improving its finances in the process. Credit card payment processors are available for high-risk clients that could belong to any industry. However, a few of the riskiest businesses are gambling, gaming, and telemarketing.


There are special terms and conditions that come with the use of high-risk credit card processing. The merchant may be charged a rolling reserve to prevent losses caused by chargebacks. To cover the risk, a certain percentage of credit card sales is held. The money can be held until after the merchant’s transactions are cleared.


Initially, the fees that were charged to high-risk clients were expensive with some commission rates being as high as 15%. Now, there are more affordable solutions without the need to pay severe penalty fines.


Looking for the Right One


Do not choose any payment processor to work with if you want to do good business. Consider the type of business model as you choose a payment processor because some may refuse to work with certain high-risk businesses. Ask about the types of anti-fraud methods and technologies that the processor uses to prevent chargebacks. Find a company that has a system of preventing chargebacks before they occur.


High-risk credit card processing includes a heavy emphasis on fraud prevention. Your company’s business transactions are monitored closely and certainly holds are placed on your money and bank account. These steps are important because chargebacks are expensive to fix and time-consuming to deal with for both merchants and banks. However, high-risk merchants still have a lot of control over their own finances, but you must find the right credit card processing company to work with.

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