Has your local bank declined your application, telling you they cannot open a merchant facility because your business model or history presents a risk for them? Or that they do not offer services to merchants within your industry?
Luckily, MerchantScout specializes in arrangement of all-in-one high risk merchant account solutions. Our risk management experts have a decade’s worth of experience working with trustworthy payment institutions; we adopt a flexible, case-by-case approach. With our network of tested and trusted international, offshore and domestic banking partners, we are able to provide a merchant account solution for your business even if you have been categorized as high-risk before, or you are facing difficulties as a startup business.
There are many factors considered by banks and payment providers when deciding whether a business should be classified as high-risk. The primary concern is the reputation of the industry in which the business is operating, and its trading/processing history. For example, the online gambling industry is automatically considered as high-risk by acquiring banks due to track record of unregulated schemes. When there is the potential for clients to end up feeling dissatisfied with the product or service, or when volumes are higher, there is a higher chance of disputes. Theft of credit card details or other data is also a risk. The providers are at risk and thus impose stricter terms, or decline the merchant account opening.
What is a high risk merchant account?High Risk MCC categories list
Credit card processing history is the second most important factor when it comes to getting approved. Card schemes, such as Visa and MasterCard, dictate the acceptable chargeback thresholds, which stand between 1-2% from sales volume and transaction count. Many businesses can reach this threshold very quickly and even a couple of consecutive months above 2% will lead to the bank will terminating the merchant account. This is why most high-risk merchants are asked for card processing statements detailing the previous 6 months and can only be approved after a thorough review. High chargeback ratios, excessive refunds and fraud trends lower the chances of getting approved.
How to prevent chargebacks?