4 Steps to Getting the Right High-Risk Merchant Account

Happy Guest Blogger Monday! This week our guest talks about establishing the high-risk merchant account that’s right for your ecommerce solution. Without this knowledge, you might be at risk yourself–for winding up without a merchant account. VP of PayNetSecure.net Tina Brandon guides you through four steps to ensure your business stays safe and your accounts stay open.

Has Your Ecommerce Business Been Labeled “High Risk”?
4 Steps to Getting the Right High-Risk Merchant Account

The lifeblood of your ecommerce business is the ability to accept payments from your online customers. In the last 9 months, banks have been shutting down merchant accounts for many ecommerce businesses because the banks are mitigating their risk. Even if the merchant has good processing history, low charge-backs and fraud, you can find yourself cut off.

There are a lot of sharks lurking in murky waters of high-risk merchant processing that take advantage of unwary business owners. Here are 4 ways to protect yourself.

Establish a Direct Account. Any business with high-risk credit card processing volumes of $50,000 or more should establish an account directly with an acquiring bank. It takes a little more paperwork to set up a high-risk merchant account with a bank compared to using a third-party payment processor but the benefits are worth the extra effort.

A direct high-risk merchant account eliminates the middleman and protects your cash flow. With a direct account, all settlement money is sent directly to you from the bank, providing faster and safer deposits.

Avoid Application or Setup Fees. Stay away from high-risk merchant account providers who charge setup or application fees. Typically the “middlemen”/third-party processors are those that charge setup fees.

Reputable firms that establish high-risk accounts are registered agents and get paid by the acquiring banks. Although there may be some fees associated with establishing high-risk merchant accounts, those fees are assessed by the banks or card brands and should be paid directly to them, not to an agent.

Establish More Than One Merchant Account. Any high-risk merchant processing more than $100,000 per month is wise to establish more than one account.  Redundancy and backup is critical for any business but especially so for high-risk merchants. Companies should consider setting up more than one high-risk account, perhaps in different jurisdictions, to safeguard cash flow from card payments.

We all know the saying “Don’t put all your eggs in one basket,” and this is especially true for ecommerce businesses. Diversifying your processing with multiple banks creates an environment where banks are competing for your business. This drives your fees down and profits up.

Interview the High-Risk Merchant Account Provider.
It’s amazing how many companies don’t answer their phones and don’t respond to voicemail or emails. Take your time to call the companies and interview them as you would a new hire. Judge the level of customer service and responsiveness.