A merchant is regarded as high risk business if the bank believes acceptance of a merchant will lead to a greater than usual risk of financial loss. High risk businesses can still obtain merchant processing. But, many times, it takes expert advice to find out which acquiring bank is most effective to handle the specific needs of your high-risk business.
It really is well worth-while for a Dangerous Business to seek the expertise of any payment processing professional who understands how best to package the applying and how to best present your small business to the right banking officer.
Furthermore, any organization may wish to consider establishing accounts at more than one bank and quite often in more than one jurisdiction. Like any other business operation, redundancy of payment processing accounts protects your business from unforeseen contingencies.
How come banks be worried about dangerous businesses? The answer is easy. Banks are concerned about chargebacks.
A chargeback develops when a consumer calls the issuing bank and disputes a charge. The consumer has got the right to dispute a charge up to 180 days after buying a service or product. Therefore, the bank is ultimately accountable for contingent liabilities of half a year on every purchase made utilizing a card.
There are many reasons for chargebacks. Some are valid. For instance, a consumer may not have access to received merchandise or even a merchant may refuse to refund money to an unhappy consumer. Sometimes a consumer calls the bank rather than calling the merchant resulting in a chargeback being issued.
Sometimes, neither the business nor the consumer is to blame for chargebacks. Chargebacks may be brought on by identity theft, fraud and cybercrime.
Countless Americans are influenced by identityft each year. The television show “Dateline” reports that the stolen identity, including all charge card and banking information, can sell for less than $5 on the internet.
Within a few minutes, merchants can be targeted by fraudsters around the world buying items using stolen credit card information. Chargebacks ensue. The merchants and the banks generate losses. And consumers are angry and frightened by the losing of their identity.
Merchants can dispute chargebacks. The merchant may even win the dispute. But, the bank sees an archive of dissatisfaction on the a part of consumers. And, the chargebacks still remain on the merchant’s processing statements and they are still considered chargebacks when account ratios are calculated.
The credit card providers insist that the credit card merchant account portfolio from the banks remain under 1%. If a merchant consistently exceeds the 1% threshold, the bank is fined. The more the merchant stays over the threshold, the higher the fines become. When a bank continuously has a high percentage of chargebacks from merchants, the bank risks losing its ability to issue merchant accounts.
In case a business consistently have chargebacks, fines are assessed against the bank. The bank, in turn, passes the fines on to the merchant who may or may be unable to pay. If chargebacks usually do not quickly fall below 1%, the bank will livzfq the processing account. Because of this, the merchant may get out of business or declare bankruptcy. Leaving the bank financially accountable for the chargebacks.
Carefully watch your credit card merchant account processing statements each month. Nip any chargeback problems in the bud, before they escalate and threaten your merchant processing account.
If you are a High Risk Business, avail yourself of the expertise your payment processor has to assist you manage your account. You can find excellent specialized tools available that can minimize chargeback risks while maximizing sales results.