Prior to accepting of credit card payment there is a must for a business to obtain merchant account first into an acquiring bank. And so merchant account could have two categories and these are high risk and low risk.
Once certain is considered or perceived as risky, high risk payment processor is a must. There are numbers of processors that are accepting high risk clients and most of them are operating overseas. Though there could be a possibility of risk, high risk credit card processing is still considered by many. It offers both advantages and disadvantages in the industry.
Though being at risk could be detrimental still there are numbers of benefits that it could offer. For the advantages that high risk credit card processing could offer, consider the following:
Global Expansion – there are numbers of merchants that are hoping to thrive within the global ecommerce so would seek for the help of high risk payment processor due to potential expansion it could provide. It has the ability to accept card-not-present transactions, sell to other clients in different countries and process multiple types of currencies.
Limitless Earning Potential – high risk credit card processing could offer recurring payments, accept credit card transactions exceeding given amount, earn more than expected money a month and so sell any of the product or services.
Non-Threatening Chargebacks – merchant accounts that are traditional are usually assessed to have lower chargeback once compared with high risk credit card processing but it could be detrimental due to long term repercussions that low risk chargeback could offer. Merchant account in higher risk could be terminated rarely due to excessive chargebacks. There could be higher fines but the assurance of business operations for longer period of time will not be in danger.
And for the disadvantages that are being levelled in high risk credit card processing, here are some of the following:
Excessive Fees – since processors are into assuming about inevitable chargebacks there will be excessive fees to be imposed as well. These excessive fees could lead for the merchant to be out of the business.
Revenue-Stealing Rolling Reserves – high risk payment processor requires merchant account reserve which is a savings account that is non-interest bearing being used by acquiring bank during emergency situations for the purpose of protecting assets. High risk credit card processing must really have rolling reserve but the funds couldn’t be accessed up until 180 days and might cause serious issue about cash flow for high risk merchants.
Increased Chargeback Fees – another disadvantage in high risk credit card processing is the idea of having to pay fees for chargebacks and in higher rates. High risk payment processor has higher fees into every individual case being filed against the merchant.
Those are among the pros and cons of high risk credit card processing that might be experienced. There are numbers of things that might lead you to be in the high risk and having bad credit could be one among the reasons making your business in high risk.