If you run a business and rely on one merchant account, you could set yourself up for future trouble.
People think there is no reason to have multiple merchant accounts because they run a legal and legitimate business. They might ask, “Why would a bank shut down a perfectly legal and clean account?”
It doesn’t matter whether your merchant account is at risk of being shut down by the processor; having multiple merchant accounts is beneficial, especially if you are a high-risk merchant.
Most successful high-risk merchants use two or three high-risk merchant accounts and sometimes an offshore merchant account as well to protect their business from any potential issues that might arise. Don’t risk a single merchant account shutting down your business, costing you thousands of dollars daily.
The Risk of Relying on a Single Merchant Account
The simple fact is that at any point, your merchant account can shut down service to your business regardless of classification. Since every payment processor is different – and there are no federal regulations – there’s a lot of leeway regarding how and why your merchant account gets turned off.
Payment processors and banks can freeze or terminate merchant accounts with little to no warning due to unusual transaction activity, an unexpected spike in chargebacks, or changes in the processor’s risk tolerance. If this happens, your business may lose access to its funds, sometimes for weeks or even longer.
If chargebacks suddenly increase, payment processors may flag the account as high-risk and take action, including holding funds or closing the account. Without a backup merchant account, your business could be in jeopardy.
For many businesses labeled high-risk, their liability and federal regulations might change in an instant. When that happens, payment processors may recategorize your account, leading to potential shutdowns without warning.
Using only one merchant account is like playing with fire. It’s risky because no matter what business you run, there’s always the chance of something out of your hands costing you access to your money.
Avoid Volume Caps and Chargeback Limits
All merchant accounts have monthly volume caps. A volume cap is the maximum amount of money a merchant account can process within a given period – typically a month.
Volume caps exist mainly because banks do not want to be responsible for covering a large amount of money if customers request it back and want to avoid potential exposure to fraudulent activity.
If a business receives more money than the maximum allowed on a merchant account, the account will stop accepting cash. Your merchant account will halt transactions, hold funds, or suspend the account until further notice.
That’s why Limitless Payment Solutions recommends using two or three accounts. This allows you to accept a larger monthly volume without the risk of failed transactions and suspended accounts.
If you process over $50,000 monthly, you should open multiple merchant accounts to avoid meeting the monthly cap.
Another benefit is that you’re evenly distributing your monthly volume and chargebacks among multiple merchant accounts. When you evenly distribute your chargebacks between multiple accounts, your chargeback ratio will be lower for each account.
Utilizing multiple merchant accounts allows you to organically grow your business without fearing being locked out of your account because you are too successful.
Load Balancing
This is an easy and quick way to protect your company’s cash flow. Load balancing is a technology that divides your transactions across multiple accounts.
If you hit the monthly volume cap or one of your merchant accounts freezes for some reason, you still have a live account accepting money.
You can set it up to automatically distribute every other transaction to a different merchant account.
What to Consider when Choosing Multiple Merchant Accounts
Every business needs to make a conscious, calculated decision when choosing a payment processor, especially if your business is labeled high-risk.
Not every merchant account is the same, so keeping these factors in mind will help your business stay up and running.
The first is choosing the right payment processor.
Not all payment processors specialize in high-risk industries or offer the flexibility needed for businesses managing multiple accounts.
When selecting a provider, consider:
- Industry Experience
- Approval Rates
- Integration Capabilities
Second, look at the contract for hidden fees or unclear terms of service. These could include fees for chargebacks and processing or penalties for early termination.
Limitless Payment Solutions specializes in high-risk merchant accounts and connects you with an extensive network of processors to ensure you get approved quickly, even if more prominent merchants have denied you.
Choose a high-risk payment processor you can trust and who’s willing to work for you. Our 24/7 service means we’re here to help whenever you need us most.
Take Control of Your Payment Processing with Limitless Payment Solutions
Don’t leave your business vulnerable to account shutdowns. Schedule a free consultation with Limitless Payment Solutions or apply for a high-risk merchant account today. Whether you sell peptides, kratom, or any other high-risk industry, with over 10 years of experience helping businesses like yours grow, we have the tools to ensure your business succeeds.