Some businesses are categorized as ‘high risk’ by financial institutions because of the industry that they are in faces a greater risk of chargebacks. If you are the owner of a high-risk business and are wondering what the consequences of being labeled high risk are, then the main implication is that you’ll only be able to open high-risk merchant accounts with banks and payment processors.
However, there are still advantages to having a high-risk merchant account. This post will tell you all about them.
A merchant account is an account that’s used to accept payments from people using their debit and credit cards. If you do not have a merchant account, then you won’t be able to accept card payments. Not accepting card payments will not only annoy customers but will also make it impossible for you to break into international markets.
A merchant account, whether it’s high- or low-risk, will allow you to accept payments from people by card, which in turn means that you can accept international payments. You should be aware that the fees charged for international costs can be much greater with high-risk merchant accounts.
When you have a high-risk merchant account, you can’t be charged back. The reason for this is that the high-risk merchant account provider that you work with won’t allow customers to make chargeback requests at all. The only time that you will ever have to return money to customers will be if you decide that they are entitled to a refund.
Some industries are at greater risk of chargebacks than others, as mentioned previously. If your business’s industry is one of these, then chargebacks are a real threat. Business owners lose millions of dollars each year to fraudulent chargebacks.
Because of everything mentioned here in regard to international payments so far, it should come as no surprise to learn that having a high-risk merchant account can significantly boost your profits. While it’s true that the fees and costs associated with these accounts can be a drain, if you market your business well and sell to international markets, you can still make a considerable amount of profit.
The ability to accept multiple currencies means that you can take on customers located all over the world. If you do intend on selling internationally, then make sure that you give your marketing efforts a boost and work to capture the attention of foreign consumers
When you accept card payments, you have a lot more opportunities for growth. You can expand your audience internationally, and also get a lot more people interested in your business’s products and services domestically.
Your main mission as a business owner should be your business’s growth. Just because you are only able to access a high-risk account does not mean that you aren’t going to be able to grow. The fees, while annoying, are not large enough to have any kind of detrimental impact on your company’s profits.
It’s a lot more simple to have a merchant account than it is not to. When you have a merchant account, customers can send payments directly without having to worry about depositing money in their accounts using services like PayPal, and then transferring the money to your business to make purchases. You should try to make your clients’ buying experience as simple as possible. Having a merchant account allows you to do this. If your customers have to complete various complex procedures in order to make purchases, they will probably end up shopping somewhere else.
Establishing legitimacy is very important today, especially since cybercrime and fraud are more common than ever before. When you have a high-risk merchant account, it establishes you as a genuine business in the eyes of your customers. It is also worth noting that having one of these accounts also gives your clients financial protection if you were to commit fraud (not to suggest that you would), which will make them feel a lot more comfortable shopping with you for the first time.
When you have a high-risk merchant account, it’s a lot easier to manage your business’s finances. All transactions will be saved on statements, which will be emailed to you at the end of the month. If you have any concerns about specific transactions, then you can reach out to the company with whom you hold an account and ask them to explain to you what’s going on. The company that you hold an account with will be able to answer your queries immediately. With that said, try to find one with a dedicated 24-hour support team, just in case you do have any problems that need to be resolved outside of their ordinary operating hours.
Recordkeeping should be one of your primary concerns as a business owner. A failure to keep precise and meticulous records can be disastrous. If you don’t keep meticulous records, then you won’t have a full log of all of the sales that you have made, in addition to your customer’s contact information. Because you have statements sent to you by your bank at the end of each month, you don’t have to worry about filing and creating records yourself. You can organize your statements and use those as records. Information about the sales that you have made can give you an accurate and useful insight into your customer’s spending habits and sales trends
If your business is a high risk, then you won’t be able to access normal financial products. Your merchant account and insurance will have to be high-risk accounts. As this post shows, however, high-risk accounts have their advantages, making them an acceptable choice for businesses interested in expanding.
Lastly, when you hold a merchant account, regardless of risk status, that immediately opens up all of the financial institution’s other products. You might be able to get better deals on other financial products and insurance. If you are interested in any of the bank’s products, then you should reach out to them and express this, and you will undoubtedly receive a discount of some kind. There may also be other services, such as one-on-one consultations with business advisors, that the bank you hold a merchant account with can offer you.
About the Author
Zeke Gavin is a freelance financial planner who aims to educate the younger generation and equip them with fundamental financial knowledge to help them make smart decisions on where to invest their money.