With the steady increase in digital payments, many organizations seek cost-effective payment processing options. In actuality, only 19 percent of consumers still prefer to pay with cash. Even though most payment service providers handle a wide variety of industries, there are always a few that they are a bit more cautious about.
These typically belong to high-risk industries, which are intrinsically more susceptible to fraud and chargebacks. Finding an appropriate payment processor may be difficult if your company falls into the “high-risk” category. But who determines whether an enterprise is high-risk? What variables determine the risk? This article will help you understand the benefits of high risk merchant accounts.
What Is a High-Risk Merchant Account?
To take debit and credit card payments, “high-risk” businesses must have a “high-risk” merchant account. A company with a higher possibility of chargebacks or fraud is considered high-risk (and specific other characteristics). However, no central body or framework within the payments sector defines a business’s risk criteria. Instead of this, each bank and payment processor has its own set of standards.
Some payment solution providers may explicitly say that they do not serve particular industries. Others will generally request extensive information about a company to determine its risk profile; their application may be accepted or denied based on this evaluation. It all comes down to the payment processor’s internal criteria and risk management perspective.
Moreover, high-risk organizations are typically forced to pay higher fees and undergo additional scrutiny to get merchant services. A merchant bank may place a rolling reserve – the amount of money needed to cover the potential of a chargeback – on account of a high-risk business if the business has a lengthy history of refunds and chargebacks.
Benefits Of High-risk Merchant account
Effortlessly administer your account.
Many businesses find it simple to handle their credit and debit accounts through merchant accounts. Since these accounts provide organized information about all payments made and received, they are required. You can control your resources and view the statements online. It is often tough to track expenses, especially when they are made through numerous channels. International credit card processing is a feature of merchant accounts. These may include credit card payments, debit card payments, smartphone payments, etc.
A merchant account will increase your efficiency by reducing the time required to perform complex accounting computations. In addition, an all-encompassing payment method will boost your platform. Undoubtedly, entrepreneurs from all regions of the world are adopting these payment platforms at an increasing rate.
Security augmentation
By opening your merchant account with a PCI DSS-certified PSP, you can ensure the security of your customers’ cardholder data. To obtain certification, a PSP must adhere to the stringent security requirements outlined by the PCI Data Security Standard (PCI DSS) and employ cutting-edge technology to detect fraud and safeguard credit card data.
According to a recent survey by ACI Worldwide, more than half of consumers fear credit card data theft. Suppose your customers are aware that you adhere to stringent security measures. In that case, they will feel confident making purchases through your online business since they know their information is secure.
The capacity to accept payments in a multitude of currencies
Accepting several currencies is one of the primary advantages of merchant accounts. It ensures that you can contact clients across international borders and that they can pay in their native currency. This dramatically streamlines the payment procedure for these overseas consumers, and it’s no secret that the easier it is for people to pay, the more likely they are to return.
To enable your firm to accept international payments, you’ll need your PSP’s assistance in establishing an immediate merchant account for each currency. Some PSPs, such as DPO, have merchant accounts for numerous currencies already based in their name to ease the acceptance of multiple currencies with minimal work on the part of retailers. Once configured, credit card processing for your merchant account is simple with all currencies, and your account will get credited in your chosen currency.
Customers’ Convenience
A merchant account may result in satisfied (and returning) customers simply by enabling many payment options.
Your consumers will have a positive experience with your company if they can shop how and when they want, with convenience, using credit or debit cards, an online shopping cart, mobile payments, or recurring billing.
Today’s consumers place a premium on versatility. Giving your customers a range of payment options, including checks, cash, gift cards, credit cards, and debit cards, gives them complete control over their finances. Provide your consumers with the freedom and adaptability they expect to keep them satisfied.
Opportunity For Lower Prices
With a single merchant account, companies must negotiate one processing rate for all of their websites. However, if a single account is chosen, the acquiring bank will likely demand a hefty fee based on the level of risk posed by the highest-risk firm.
With several merchant accounts, businesses may negotiate the processing rates for each site and obtain better pricing for their lower-risk operations, resulting in immediate cost savings.
Businesses can also avoid significant earnings losses if an acquiring bank or processor has an outage. With several merchant accounts (using separate processors), just one brand will get impacted by the outage instead of the entire enterprise. This reduces losses to a minimum.
Conclusion
Merchant accounts can appear intimidating at first glance. It would help if you examined several aspects of these instruments, ranging from expensive costs to contractual obligations. However, a merchant account may be necessary if you intend to run a business that accepts credit cards regularly.
Before signing on the dotted line, the most significant thing you can do to ensure you get the best bargain is to compare your options thoroughly. Exploring the sector and determining the type of assistance available will enable you to make a more confident choice. You may decide that having a payment service provider rather than a merchant account is more advantageous.
Smaller businesses may find PSPs suitable for collecting payments, as they provide greater flexibility when starting. Which payment processing solution do you employ? Share your thoughts in the section below!
