martina smith's blog : High-Risk Merchant Account Guide by WebPays
Introduction
High-risk businesses are those
that operate in industries considered risky or prone for several reasons, such
as fraud, chargebacks, nature of business, business location, etc. Due to their
high-risk status, these businesses often face challenges when it comes to
accepting payments from customers. This is where high risk payment
processing comes into play. It
is an essential payment solution that a business requires for accepting
electronic payments from customers.
A Javelin
Strategy & Research study found that high-risk businesses experience
a significantly higher rate of fraud than other types of businesses. In fact,
high-risk merchants experience fraud at a rate of 1.58% of their total
transaction volume, compared to 0.68% for other types of merchants. This
underscores the importance of high-risk payment processing solutions in
protecting these businesses and their customers from fraud and chargebacks.
Which industries are regarded as high-risk?
High-risk businesses are those
that operate in industries that are considered risky or prone to fraudulent
activities. Some examples of high-risk businesses include:
1.
Online
gambling: This industry is considered
high-risk due to the high volume of transactions and the potential for
fraudulent activities.
2.
Adult
entertainment: This industry is
considered high-risk due to the nature of the content and the potential for
chargebacks.
3.
Tobacco: This industry is considered high-risk due to the
potential for legal and regulatory issues.
4.
E-cigarettes: This industry is considered high-risk due to regulatory
uncertainty.
5.
Forex: This industry is considered high-risk due to the
potential for legal and regulatory issues and currency fluctuation.
6.
IPTV: These industries are considered high-risk due to the
content copyright issue and potential for chargebacks.
Other than these, many other
businesses are considered high-risk due to several factors; let's see how these
are designated as high-risk categories.
Why are they labeled as high-risk?
High-risk businesses are labeled
as such due to several factors, including:
1.
High
chargeback rates: High-risk businesses
often have higher chargeback rates than other types of businesses, which can
lead to financial losses and reputational damage.
2.
Legal and
regulatory issues: Some industries, such
as forex and tobacco, face legal and regulatory issues that make them
high-risk.
3.
Fraudulent
activities: High-risk businesses are
more prone to fraudulent activities, such as identity theft and money
laundering.
4.
High
transaction volumes: Some high-risk
industries, such as online gambling and travel and tourism, have high
transaction volumes, which can make them attractive targets for fraudsters.
5.
Uncertain
market conditions: Some high-risk
industries, such as e-cigarettes and nutraceuticals, face regulatory
uncertainty, which can lead to financial and legal risks.
6.
Nature of
business: Some businesses, such as adult
toys and escort services, are considered unreputed by many payment processors.
Difficulties faced by high-risk merchants in getting payment processing:
High-risk merchants face several
difficulties when it comes to getting payment processing, including:
1.
Limited
options: High-risk merchants often have
limited options when it comes to payment processors. Many traditional payment
processors are unwilling to work with high-risk businesses due to the potential
for chargebacks and fraud.
2.
Higher fees: Payment processors that work with high-risk merchants
often charge higher fees than those that work with low-risk merchants. These
fees can be significant and can eat into the merchant's profits.
3.
Lengthy
application process: The application
process for high risk merchant accounts can be more time-consuming and
complicated than for low-risk payment processing. Merchants may need to provide
additional documentation and undergo a more rigorous underwriting process.
4.
Rolling
reserves: Payment processors may require
high-risk merchants to maintain a rolling reserve, which is a percentage of
each transaction that is held in reserve for a certain period of time. This
reserve can tie up a significant amount of the merchant's funds and can make
cash flow management more challenging.
5.
Chargeback
monitoring: High-risk payment processors
may require merchants to implement chargeback monitoring tools to help prevent
and manage chargebacks. These tools can be expensive and require additional
resources to manage.
Other than these mentioned above,
high-risk merchants face several difficulties when it comes to getting payment
processing. These challenges can make it more difficult for high-risk merchants
to operate their businesses and can have a significant impact on their bottom
line.
What is high-risk payment processing?
"High-risk payment
processing" refers to payment processing services that are
specifically designed for businesses operating in high-risk industries. These
services include high-risk merchant accounts, high-risk payment gateways, credit card processing, etc. High-risk payment
processing is essential for businesses operating in high-risk industries,
enabling them to accept customer payments while minimizing the risk of fraud
and chargebacks. These services are often provided by specialized payment
processors that have experience working with high-risk businesses and
understand the unique challenges they face. A high-risk merchant account
and payment gateway are the fundamental need of an online merchant; let's
understand both of them:
A "high-risk merchant account" is a
type of bank account that enables merchants to accept payments from customers
for selling their goods and services. These accounts offer features such as
fraud detection and prevention tools, chargeback monitoring, and rolling
reserves. High-risk merchant accounts are often provided by specialized payment
processors that specialize in working with high-risk businesses, such as
WebPays.
On the other hand, a “high-risk payment gateway”
is a service that facilitates the transfer of funds between the customer's bank
account and the merchant's high-risk merchant account. High-risk payment
gateways typically offer additional security features, such as encryption,
tokenization, and 3D security, to minimize the risk of fraudulent transactions.
They may also offer other features, such as recurring billing and subscription
management.
How does a high-risk merchant account help these businesses?
A high-risk merchant account can
help high-risk businesses in several ways, including:
1.
Ability to
accept payments: A high-risk merchant
account (HRMA) allows high-risk businesses to accept payments from customers
via credit card or other electronic payment methods. Without this, these
businesses may struggle to find payment processors willing to work with them,
which can limit their ability to accept payments and impact their revenue.
2.
Fraud
detection and prevention: It typically
comes with fraud detection and prevention tools that can help identify and
prevent fraudulent transactions. These tools may include AVS, CVC, and other
security features.
3.
Chargeback
monitoring: HRMA often comes with
chargeback monitoring tools that can help high-risk businesses manage and
prevent chargebacks. These tools can help reduce the financial impact of
chargebacks, which can be significant for high-risk businesses.
4.
Rolling
reserves: High-risk merchant accounts
may require merchants to maintain a rolling reserve, which is a percentage of
each transaction that is held in reserve for a certain period of time. This
reserve can help protect the payment processor from losses due to chargebacks
and other issues. While rolling reserves can be challenging for businesses to
manage, they can also provide a level of financial stability and
predictability.
5.
Improved
reputation: By working with a high-risk
merchant account provider, high-risk businesses can improve their reputation
and credibility with customers and partners. This can be especially important
for businesses operating in industries that are prone to fraud or that face
regulatory scrutiny.
In recap, a high-risk merchant
account can help high-risk businesses by enabling them to accept payments,
providing fraud detection and prevention tools, offering chargeback monitoring,
requiring rolling reserves, and improving their reputation and credibility.
These benefits can help high-risk businesses overcome the unique challenges
they face and operate more effectively in their industries.
How to choose an ideal high-risk merchant account provider?
Choosing the best payment
processor can be a challenging task, but there are several factors to
consider that can help you make an informed decision. Here are some key factors
to consider when choosing an ideal high-risk merchant account provider:
1.
Experience
and expertise: Look for a provider with
experience working with high-risk businesses in your industry. They should have
a deep understanding of the unique challenges faced by high-risk businesses and
be able to provide customized solutions to meet your specific needs.
2.
Reputation: Research the provider's reputation in the industry,
including reading reviews and checking with industry associations or regulatory
bodies. Look for a provider with a proven track record of reliability and
transparency.
3.
Security: Look for a provider that offers robust security
features, such as encryption, tokenization, 3D secure authentication, and other
advanced fraud detection tools. An advanced chargeback management system should
also be in place. Ensure the PSP complies with relevant security and compliance
regulations, such as SSL, PCI-DSS, and GDPR.
4.
Pricing and
fees: Consider the provider's pricing
and fees, including transaction fees, setup fees, and rolling reserves. Make
sure you understand all the costs involved and choose a provider with transparent
pricing and no hidden fees.
5.
Customer
support: Look for a provider with
dedicated customer support, including 24/7 availability and knowledgeable
support staff. You should be able to reach them easily via multiple mediums and
get prompt, helpful assistance when needed.
6.
Integration
options: Consider whether the provider
offers integration options with your existing systems, such as your website or
application. This can make it easier to manage your payments and streamline
your business processes.
By considering these factors, you
can choose one of the best payment processing companies that can help
your high-risk business succeed.
Top 5 high-risk merchant account providers in Europe:
The best high-risk merchant
account providers in Europe include:
1.
WebPays: WebPays is a Holand-based payment processor that
specializes in providing high-risk merchant accounts to businesses across
Europe. They offer a range of features, including fraud prevention tools,
chargeback protection, and fast approvals.
2.
Payment Cloud: Payment Cloud is a US-based payment processor that also
serves businesses in Europe. They specialize in providing high-risk merchant
accounts and offer features such as chargeback protection, fraud prevention
tools, and quick approvals.
3.
Durango
Merchant Services: Durango Merchant
Services is a US-based payment processor that provides high-risk merchant
accounts to businesses in Europe. They offer a range of features, including
fraud detection and prevention tools, chargeback protection, and 24/7 customer
support.
4.
Stax: Stax is a US-based payment processor that specializes
in providing high-risk merchant accounts to businesses in Europe. They offer a
range of features, including fraud prevention tools, chargeback protection, and
customized solutions for high-risk businesses.
5.
Total
Processing: Total Processing is a
UK-based payment processor that provides high-risk merchant accounts to
businesses in Europe. They offer a range of features, including fraud
prevention tools, chargeback protection, and fast approvals.
These are just a few of the many high-risk
payment processing providers available in Europe. It's important to note
that each high-risk processor may have different features, pricing, and
requirements. Businesses should carefully evaluate their options and choose a
provider that best fits their needs and requirements.
Suggest the best one and explain why it is the best
WebPays is a Netherland-based payment processor that specializes
in providing high risk
payment solutions to businesses across Europe. They offer a range of
features, including fraud prevention tools, chargeback protection, and fast
approvals. Here are some reasons why businesses should consider WebPays as
their payment provider:
1.
Experience
and expertise: WebPays has extensive
experience working with high-risk businesses in various industries. They have a
deep understanding of the unique challenges faced by high-risk merchants and
offer customized solutions to meet their specific needs.
2.
Wide range of
payment options: WebPays offers 100+
international currencies and 35+ alternative payment methods, including credit
and debit cards, e-checks, ACH, crypto, and more. This can help businesses
reach a broader range of customers and improve sales.
3.
Robust
security features: WebPays offers robust
security features to protect businesses from fraud, including 3D secure
authentication, encryption, tokenization, AVS & CVV checkers, fraud
scoring, and other state-of-the-art fraud and chargeback prevention tools. They
also comply with relevant security and compliance regulations, such as SSL,
PCI-DSS, and GDPR.
4.
Transparent
pricing: WebPays offers transparent
pricing with no hidden fees, making it easier for businesses to understand and
manage their costs.
5.
Excellent
customer support: WebPays offers 24/7
dedicated customer support with knowledgeable and helpful staff. They are
available to assist businesses with any issues or questions they may have.
Overall, WebPays will be a good
choice for businesses in Europe looking for a high-risk merchant account
provider with experience, a wide range of payment options, robust security
features, transparent pricing, and excellent customer support. However, businesses
should carefully evaluate their options and choose a provider that best fits
their needs and requirements.
Frequently
Asked Questions (FAQs) for High-risk Merchant Accounts
Q: What is a high-risk merchant account?
A: A high-risk merchant account is a type of payment processing account
that is designed for businesses that are considered high-risk due to their
industry, credit history, or other factors. High-risk merchants often have
difficulty getting approved for traditional payment processing accounts and may
require specialized solutions.
Q: What is a high-risk payment gateway?
A: A high-risk payment gateway is a software application that facilitates
the transfer of payment information between a website or application and a
payment processor. High-risk payment gateways are designed to handle the unique
needs and risks associated with high-risk businesses.
Q: What are the benefits of using a high-risk merchant account?
A: Using a high-risk merchant account can provide a number of benefits for
businesses that are categorized as high-risk. These benefits can include access
to a wider range of payment options, chargeback protection, and fraud
prevention tools. Plus, you will get customized solutions to meet the unique
needs of high-risk businesses.
Q: Can I still get approved for a high-risk merchant account if I have bad
credit?
A: Yes, getting approved for a high-risk merchant account is possible, even
if you have bad credit. However, keep in mind that it may result in higher fees
and rates. It is important to work with a reputable, high-risk payment
processing provider like WebPays that has experience working with businesses in
your industry and can provide customized solutions to meet your specific needs.
Q: How long does it take to get approved for a high-risk merchant account?
A: The approval time for a high-risk merchant account can vary depending on
the payment processor and business type. However, WebPays offers quick
approvals for high-risk payment solutions.
Q: How do I apply,
and what documents are needed for WebPays’ high-risk merchant account?
A: Click on Apply Now and complete the form. Our team will contact you for
additional requirements. Please have the following documents available so that
your application can be processed quickly:
• Complete details of your business
• Website or App of your business
• Contact Information, such as email, phone number, and
address
• Details of business owner
• Address proof of owner and business
• Documents of business partnership
• Last three months’ business bank statement
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