Why Do Banks Consider My Business High Risk for Credit Card Processing?

A high risk business is the one that is deemed by the processing bank to be at a high risk of involvement in fraud and charge backs. Banks consider a business is a high risk during the process of underwriting. 

Most businesses accept payment by debit or a credit bank. It means that the business must have a merchant account opened with a bank or any other processor. These are high risk payment processing services and having proper information about your business is key.

Your personal financial history and the nature of the services offered will determine if your business is high risk. Several factors contribute to a business getting categorized under the high risk bracket.

Many businesses are not aware that they are a risk and end up realizing the truth when they search for a credit card merchant or a processor. 

Businesses that are considered to be high risk find it hard to find a bank that will give them a credit card pass. The risk becomes even more significant when the business finds a top risk credit card processor as they are prone to incurring higher rates among other unfavorable terms. Though a high risk merchant account is sometimes difficult to get approved for, there are credit card processing providers that do specialize in this.   One example of this is the site CreditRepairPayments.com, which specializes if helping credit repair businesses get a credit repair merchant account. There are other businesses with specialties like this as well, check this resource. The following types of businesses are more likely to fall under the high risk businesses category:

• Adult oriented companies
• Tobacco business
• Gambling 
• Ecommerce
• Credit Repair
• Health and Wellness
• Software among others

Your business may be Considered a High Risk business for the following reasons:

Trying to fool the Credit card processor

Failure to completely disclose the kind of Product and services that you provide will lead to your business being considered as a high risk business. The bank will quickly find out the through conducting an audit on your business. This can be frustrating and costly on your side.

Lacking ready capital resources 

Proving to the bank that your business is well-capitalized and is stable will increase the chances of getting a credit card pass. Most companies get locked out due to inadequate quoting of the business resources. The resources range from tools, buildings, equipment, inventory, and available machinery. 

If your business lacks productive assets, then you are likely to miss out on the credit card pass. Having productive assets shows your business is well funded and that the assets can absorb a financial loss. 

Failure to provide previous processing history of your business will lead to the bank considering your business as a high risk.

Businesses that lack enough capital and assets are advised to provide a well detailed and updated history of the previous processing and its provider. Failure to provide the processor history will automatically lead to your business getting categorized as a high risk business. In case your previous account was terminated. It is essential to prove to the new processor that you were not involved with illegal activities. 

Having bad business credit card score can lead to your business being considered high risk

Your personal and business credit score informs the bank whether or not you are good at managing finances. They get to know the history of your business and if you are involved in any fraudulent activities.  If your business is a high risk, you will likely get the short end of the deal. You will be given more extended contracts, early termination fees, liquidated damage clause, and huge charge back fees. Here you can check for high risk merchant solution.

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