In today’s fast-paced business environment, accepting credit and debit card payments is crucial for success. A merchant account is essential for this, acting as a unique type of business bank account that facilitates card transactions. Particularly for high-risk merchants, this process is akin to applying for a business loan, with the account being underwritten, monitored, and requiring ongoing oversight.
Securing a merchant account as a high-risk merchant comes with its challenges. It’s vital to be selective when choosing a high-risk credit card processing partner. The merchant account, managed by an acquiring bank or processor, doesn’t allow direct access to funds, which are instead transferred into the business bank account after processing.
Viewing a Merchant Service Provider (MSP) as a long-term business partner is crucial. The right choice can significantly impact your business’s financial health. It’s not just about the cost; it’s about finding a provider that combines industry expertise, dependable networks, and excellent customer service at a reasonable price, staying current with payment technology.
To make a sound decision, avoiding these five common mistakes is key:
Not Choosing a Direct Provider: Many merchant service providers exist, but having a direct relationship with the acquiring bank is advantageous. Direct providers offer lower costs and better customer service compared to agents or Payment Service Providers (PSPs), which often don’t cater to high-risk merchants.
Settling for Confusing Pricing Models: High-risk merchants face higher costs, so clarity in pricing is essential. Opt for transparent pricing models like “Interchange Plus,” which clearly separates interchange rates and markup. Beware of bundled rates with hidden fees.
Not Asking About the Acquiring Bank: Knowing your acquiring bank is crucial. They manage your merchant account and are key in the chargeback process. Understanding their role and ensuring you’re not with an offshore processor is vital for high-risk merchants.
Overlooking the True Rate: Understanding the full cost of your merchant account is crucial. Calculate your “Effective Rate” by dividing total monthly fees by total monthly sales. This reveals the actual cost of processing in relation to your profits.
Neglecting Customer Service Quality: Evaluate the type of customer service provided. Access to dedicated support familiar with your business is preferable over generic overseas call centers.
Partnering with the right high-risk payment provider makes navigating these challenges easier. A provider focused on transparency, technological advancement, and customer support can ensure a smooth payment processing experience.
Feel free to reach out with any questions or for assistance in high-risk credit card processing. Our team is here to help guide you through these complexities and find the best solution for your business.
