If you are running an e-commerce business it is essential that you have the ability to take credit card payments online. Small startups may be able to get off the ground with a payment service provider such as Paypal, but if you plan to scale your business, you’ll need a high risk merchant account as soon as possible.
Unfortunately, if you’re a high risk merchant, finding someone to process your credit card payments can be a challenge. There is no universal policy that determines whether or not your business qualifies as high-risk; it’s up to each payment processor to decide which criterion to use.
That said, there are some business types that almost always fall into the high-risk merchant designation.
● Subscription-based businesses
● Adult products and content
● Vape shops
● Firearms dealers
● Products on the verge of legality (marijuana, paraphernalia, CBD oil)
Beyond those basics, banks and merchant service providers have some leeway regarding which businesses they categorize as high-risk and which ones they don’t. There are no federal regulations to standardize the process.
Even if you don’t fall into a high-risk industry, your business can still be considered high-risk if you have a high chargeback ratio, use certain sales or marketing practices, or if you, as the business owner, have a poor personal credit rating.
Payment processors can decide how they treat a high-risk merchant. Some refuse to accept any high-risk merchants at all. Others may work with high-risk businesses, but charge them costly fees to compensate for the risk. A third, highly skilled group specializes in high-risk merchant accounts and those that have been turned down by other providers.
Merchant service providers who work with high-risk merchants have special application requirements. For this reason, the approval time is typically longer than for other businesses, and the paperwork burden is higher. The payment solutions provider needs to know as much about the financial state of your business as possible to match you with the right solution. If you’re applying for a high-risk merchant account, you should be prepared to produce the following.
Having your documents ready will speed up your application process. This is a list of the information and documents you may need to complete your application. The information requested may vary by the applicant and additional information not included in this list may be requested.
Most high-risk merchant account applications ask for information about your business and all owners. This usually includes personal and business addresses, phone numbers, website, and email addresses, and tax identification number. You may also need to provide copies of the owners’ driver’s licenses and/or passports.
You will need:
You’ll need to supply a copy of your articles of incorporation or other organizational paperwork, as well as a copy of your business license. Some payment processors may also ask for an IRS Form SS-4, which verifies your business’s Employer Identification Number or EIN.
You may need:
Most merchant service providers require a voided check from high-risk merchants, although some will accept a letter from your bank showing the business name, account number, routing number, and a statement from a bank official that your account is in good standing. If a letter is required, the name, title, and contact information of the signing official will also be required.
You will also need three to six months of recent business bank account statements, or statements from your personal bank account if the business is a startup.
You may need:
Depending on your processing volume, you may need to supply business financials, including your most recent business tax return. Some processors may request a complete financial statement with the balance sheet and profit and loss statement.
If your business has processed debit and credit card payments in the past, you’ll also need to supply three to six months’ of credit card and ACH processing statements.
You may need:
One final thing to keep in mind: It can be tempting to fudge on your application, especially if you’ve been turned down in the past. Resist the temptation! Merchants inevitably get caught when transactions are processed, and this results in immediate termination and quite possibly being placed on the MATCH list or Terminated Merchant File. Once that happens, your chances of ever getting approved in the future are very slim.
As an online merchant, it is critical that your website is ready to complete online sales before you apply for a payment account. You shouldn’t begin applying for online payment accounts until your website is fully functional and ready to make sales, it should also be PCI Compliant. PCI or Payment Card Industry compliance involves a variety of protections to ensure that credit card information is securely stored and transmitted on your site when a sale is made. Any time credit card information is transmitted electronically, it is vulnerable. A variety of security measures help to keep it secure.
These are just some of the ways you must be PCI compliant. For more information check out a complete PCI Compliance Checklist for Websites.
The approval process is definitely more difficult for high-risk merchants, but finding the right merchant service provider is worth the effort in the long run. Just because your business falls into a high-risk niche doesn’t mean you should settle for subpar service and a poor relationship. Limitless Payment Solutions has years of experience providing high-risk merchants with payment accounts so they can operate their businesses and accept online payments. Whether you need one account or multiple the experts at Limitless will work with you to get the documentation you need and approval as quickly as possible. Contact Limitless today through our fast response form.