No entrepreneur would tell you that running a business is easy. But when you’re tagged as a high-risk merchant account, simple things could easily magnify into bigger challenges, especially when it comes to finding a reliable payment processing company and getting funding to help support your business.
Our experts share five challenges high-risk businesses struggle with and how you can deal with them effectively.
Being tagged as a high-risk merchant means that conventional financiers like banks, lenders, and financial institutions are less likely to approve a business loan.
So, if you need additional funds to inject into your business, it’s best to go directly to high-risk financiers that are willing to offer high-risk loans and cash advances to high-risk merchants like you.
As a business, it’s very important to be able to process payments online, especially now that shoppers are switching to digital platforms. Unfortunately, one of the challenges high-risk businesses face is opening a merchant account from traditional financial institutions.
The good news is that there are high-risk credit card processing providers that can take on your business even if it’s tagged as high-risk.
One of the reasons your business is deemed high-risk by traditional financial institutions is the probability of a higher chargeback rate simply due to the nature of your business, the type of products that you offer, or the market that you’re selling to. For instance, recurring payments can lead to chargebacks for subscription services because customers forget to cancel their subscription, among other reasons, and they decide to request a refund directly through the bank instead of the merchant.
A chargeback usually happens when a customer demands that their money be returned due to their dissatisfaction with the product or the company’s customer service. On the other hand, some customers don’t know the difference between a chargeback and a refund and it becomes an instance of friendly fraud. If you want to avoid this, it’s important to put in stringent measures when processing online payments and making sure that you invest in good customer service.
Insurance is a must if you’re running a business. One of the challenges high-risk businesses face is the premium on insurance costs. If you’re tagged as a high-risk merchant, you’ll realize that good insurance coverage would usually set you back more than the average company.
Insurance companies are wary of high-risk merchants simply because of the industries they’re in; some even exclude high-risk industries among their clientele altogether. But since insurance is necessary in order to protect your investment, you need to find firms that could cover high-risk businesses in the most cost-efficient ways possible.
Legal battles and disputes are some of the biggest challenges high-risk businesses struggle with. If they aren’t dealt with properly, you could easily lose the business.
It could be a simple case of friendly fraud or a serious lawsuit that could hurt your business pretty badly, especially your finances and, more importantly, your reputation. To deal with these issues efficiently, it’s best to always get legal help so you can take the right steps towards winning these disputes and lawsuits.
Regardless of the industry, remember that you can manage the challenges high-risk businesses have to deal with as long as you have the right partners on your side.
Contact us to learn more about the merchant services for high-risk businesses offered at First Card Payments.