Being tagged as a high-risk merchant comes with a lot of disadvantages. Aside from having a hard time getting approved for a merchant account, you also need to constantly prove yourself worthy of that account.
It means that you have to pay higher fees, keep your chargeback rates as low as possible and maintain a good record every time.
But having to be on your toes doesn’t mean that you can’t cut costs. Here are five tips that will help you save more money and not let credit card processing fees eat up your profit:
When you’re trying to save money, the cheapest is always the easiest route. But you have to remember that a payment processor that offers the lowest processing rates isn’t always the cheapest.
In fact, a lot of these companies have hidden and unanticipated fees that could result in you paying so much more than you planned. Instead, look for a processor that could offer you transparency in terms of fees.
Substantial capitalization is still one of the best ways to prove your credibility to payment processors. When you have sufficient money in the bank, this tells them that you can finance your business and you can pay any dues consistently.
Having substantial funding is especially important when you’re a high-risk merchant because it gives you a better chance of getting an approval. Plus, processors will not charge you as much in terms of fees knowing that you are capable of paying them promptly.
Reducing processing fees is just as important as generating revenues if you are a high-risk merchant. And one of the best ways to do that is by understanding the different processing models to see which will fit your needs best.
Flat rate offers a fixed percentage transaction fee no matter what the amount. This is the easiest pricing model to understand but it also tends to be more expensive than other options.
Interchange plus is that extra cost that you need to pay to Visa, AmEx, MasterCard, and Discover with every transaction. This is the cheapest option but accounting can be difficult.
Tiered pricing is the most common model because it’s a mix between flat rate and interchange plus where all transactions are charged one of three to four flat rates. This is considered the most beneficial because it allows you to enjoy the transparency of interchange plus and the predictability of flat pricing.
Finally, you need to get your processing history right because a lot of payment processors will look at how you processed payments in the past to determine if they will underwrite your business or not.
With a good past processing history, it’s not only easier for you to get an approval but it will also help you get a low-risk merchant account in the future if you continue to do good with your transactions. Find a credit card processor that will instantly save you 25% for switching. Call First Car Payments at (877) 441-6801.