Credit Processing Tips for Your Small High Risk Business

Like too many things in life, size matters for small businesses, especially high risk ones. Whether your business sells fitness supplements or collects consumer debt, monthly revenue is incredibly important in determining availability of merchant payment processing systems. Companies with processing revenue lower than $1.2 million annually will find certain issues securing a high risk payment processor because most providers are focused exclusively on larger businesses (but not us!). While understanding the world of high risk processing can be both confusing and somewhat intimidating, a little information can help high risk small businesses secure and maintain a payments processing provider.

High Risk Merchants: Payments Processing Overview

For most merchant payment processors, a small business is generally one with less than $100,000 in monthly revenue. This is not an official number but one that is often used within the industry to target new customers. Despite that, acquiring a reliable credit payment processor is vital to the success of high risk small businesseses, such as multi level marketers (MLM), online nutraceutical sales, and debt collectors.

These simple tips can help you secure a payment process provider that will help your small high risk business succeed.

Demonstrate Substantial Capitalization

One of the best ways to secure a payment processing provider, even for a high risk merchant, is being well-capitalized. With sizeable capital resources, underwriters and banks are more willing to provide payment processing services. For a business, substantial available capital signals to payment processors that your operations will be funded and any issues regarding fulfillment or payment can be addressed in a timely manner.

High risk businesses without money in the bank are at a particular disadvantage when seeking merchant payment processing services. Even with nearly six figures in monthly revenue, many banks and underwriters will refuse the business of many high risk industries, such as online gaming, credit rehabilitation services, and nutritional supplement providers. Without capital in the bank, underwriters and banks will worry that any issue, like a product recall or data breach, will result in significant financial losses.

Previous Processing History

For businesses that don’t have substantial capital resources at their disposal, previous processing history is another option for securing a credit card processing provider. The reason, is that being able to see how you’ve processed in the past removes a lot of the mystery for the payment processor and sponsor bank, and thus enables them to get more comfortable with underwriting your business.

Often, businesses that have been dropped by a previous low risk processor are hesitant to share their past processing statements. However, businesses that are shifting from a low risk to a high risk provider should not be concerned with sharing past processing statements. Companies that provide processing to high risk merchants are often comfortable with previously terminated agreements with lower risk processors. In fact, at times, previous processing history that resulted in a terminated merchant account is better than saying that the business is a startup.

Shop Around for High Risk Processors

For businesses in high risk industries, shopping around for a merchant payment process provider is critical. Your local and most readily available payment processor (for example your at your local bank) often refuses business in certain industries. Thus, if your business qualifies as high risk, your options are going to be more limited, and so you’ll have to shop around to find a specific high risk processor willing to underwrite your business.

Selecting the Best High Risk Merchant Payments Processors

High risk merchants need to be careful about their relationship with processors. The longer and more stable their processing history, the easier maintaining processing will be. Selecting a payment processor that focuses on high risk clients can help organizations build a reputation that makes securing additional volume easier in the future. Niche focused high risk payment providers can also provide ancillary services to help mitigate risk of chargebacks, fraud, and other nuisances.

The Leader in High Risk Merchant Processing

Houston-based Soar Payments is the industry leader in high risk merchant payment processing. The company works with clients ranging from new startups to businesses processing millions of dollars a month.

Payment processors that focus on high risk merchants, like Soar Payments, also provide solutions to help limit risk, fraud, and chargebacks. For example, guaranteed purchase programs offer streamlined refunds to dissatisfied customers, greatly limiting the number of chargebacks reported to banks and credit providers. The process is handled by third party administrators and a refund request is typically handled in less than 72 hours. Chargeback alerts and fraud alerts also limit chargebacks but have the added benefit of helping high risk merchants maintain a quality processing history while offering opportunities for increasing transaction volume.