A merchant is considered high-risk business if the bank believes acceptance of a merchant will lead to a higher than usual risk of financial loss. High-risk businesses can still obtain merchant processing. But, many times, it takes expert advice to determine which acquiring bank is most effective to handle the specific needs of your dangerous business.
It really is well worth-while to get a Dangerous Business to seek the expertise of any payment processing professional who understands how better to package the application and ways to best present your company for the right banking officer.
Additionally, any organization will want to consider establishing accounts at more than one bank and often in more than one jurisdiction. Like every other business operation, redundancy of payment processing accounts protects your business from unforeseen contingencies.
How come banks concern yourself with dangerous businesses? The answer is simple. Banks are concerned about chargebacks.
A chargeback takes place 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 product or service. Therefore, the bank is ultimately accountable for contingent liabilities of 6 months on every purchase made employing a card.
There are many reasons for chargebacks. Some are valid. For example, a consumer may not have access to received merchandise or a merchant may refuse to refund money to an unhappy consumer. Sometimes a consumer calls the bank instead of calling the merchant resulting in a chargeback being issued.
Sometimes, neither the business nor the consumer is to blame for chargebacks. Chargebacks may be caused by id theft, fraud and cybercrime.
An incredible number of Americans are affected by identityft annually. The television show “Dateline” reports which a stolen identity, including all credit card and banking information, can sell for less than $5 on the internet.
Within minutes, merchants can be targeted by fraudsters around the world buying items using stolen charge card information. Chargebacks ensue. The merchants and also the banks lose money. And individuals are angry and frightened by losing their identity.
Merchants can dispute chargebacks. The merchant may even win the dispute. But, the bank sees an archive of dissatisfaction on the part of consumers. And, the chargebacks still remain on the merchant’s processing statements and therefore are still considered chargebacks when account ratios are calculated.
The credit card providers insist the credit card merchant account portfolio in the banks remain under 1%. When a merchant consistently exceeds the 1% threshold, the bank is fined. The more time the merchant stays within the threshold, the higher the fines become. When a bank continuously features a high percentage of chargebacks from merchants, the bank risks losing being able to issue merchant accounts.
In case a business will continue to have chargebacks, fines are assessed up against the bank. The bank, in turn, passes the fines onto the merchant who may or may be unable to pay. If chargebacks tend not to quickly fall below 1%, the bank will livzfq the credit card merchant account. Because of this, the merchant may get out of business or declare bankruptcy. Leaving the bank financially responsible for the chargebacks.
Carefully watch your processing account processing statements monthly. Nip any chargeback problems within the bud, before they escalate and threaten your merchant processing account.
If you are a higher Risk Business, avail yourself of the expertise your payment processor has to help you manage your money. There are excellent specialized tools available that can minimize chargeback risks while maximizing sales results.