High Risk Merchant Accounts

high risk merchants

Why is my Business Labeled as High Risk?

It helps to first define “High Risk” as it pertains to the payment processing industry and how it is determined.There are different levels of risk, on the surface it can defined by a certain industry type, the way that business accepts credit card payments, chargebacks and of course fraud. For industry type it is generally an e-commerce or online business. These business types a also referred to as “card not present” merchants. Just by the nature of the card not being present creates a risk, it is virtually impossible for the merchant to know if the presenter is the actual authorized card user because they are not there and they can not verify a signature. These types of transactions are known as “Mid-Qualified” or “Non- Qualified” transactions in the payment industry and come with a premium in pricing. Then there are “chargebacks”. Chargebacks occur when the customer disputes the transaction and request a refund for a number of the different reasons. Having a high chargeback ratio has huge negative consequences for a merchant and if they exceed between 2 – 2.5% per month the merchant account can be is at risk of being “shut off”. If they exceed that amount the account will be shut off and most of the time without notice. This can obviously have a devastating effect on the merchant and often leads to the business failing. 

Chargeback Mitigation and Prevention

Fortunately there are ways to mitigate chargebacks. FinTech integrates chargeback management software in our payment gateway as part of our solution. This enables our merchants to combat and resolve chargebacks before they happen. This is one of the many reasons we are a premiere choice in the high risk arena and continue to have the highest approval rate in the industry.

High Risk Providers

Now that we reviewed some of the factors that can make a merchant High Risk let’s discuss the providers. Just like there are different levels of high risk merchants, there are also different levels of service providers. Most payment processing companies and banks cater to the “brick and mortar” type of businesses, they have an extremely low risk tolerance, so if the merchant does not fit their cookie cutter mold they will not approve them. Those types of providers represent the vast majority of the industry. Then there are a small handful of providers in the industry that do not specialize in high risk but have more of a relaxed set of underwrinting guidelines and will consider a certain amount of risk. These providers will hedge their exposure in several ways. First they will require a “rolling reserve” account to insulate themselves against chargebacks. The typical rolling reserve is a hold of 5-10% of the total volume processed and rolls for 6 months. The second way is to limit their exposure by providing a “capped account’  which simply means they will set a limit on the amount they will allow the business to process each month. It is usually between $25-$35,000 per month. That coupled with the amount held in reserve can really hold back a business by not allowing them to grow beyond that point, and if you have a couple of chargebacks they will shut the account off with out notice. Then there are true High Risk specialist like FinTech; we provide you with an “Uncapped” unlimited account to allow you to grow your business. We receive applications everyday from merchants who were with with some of the providers described above and we have been able to ameliorate their situation dramatically, that is the difference when dealing a specialist.

Direct MID’S and Aggregate (AGG) Accounts ​

A MID is an acronym for Merchant Identification Number. A Direct MID merchant account is issued to a business that has high volume and low chargebacks. Approved merchants will receive a custom descriptor and the account is uncapped allowing the merchant to process unlimited volume.

An Aggregate or AGG is a merchant account that is shared with a group of other merchants to hedge the risk and managed by a third party. An AGG works out well for merchants that are unable to qualify for MID by not meeting volume requirements or has a history of high chargebacks. The underwriting for an AGG is very liberal and quick. The merchant will receive a generic descriptor and like the MID the account is uncapped and unlimited on volume. It is very common for a merchant to start off with an AGG and move to a MID after getting established.

FinTech offers and provides both Direct MID’s and AGG Accounts which gives us the abilty to set up and open an account no matter what your situation is, as long as the business is legitimate and legal we can get you approved. To begin the process please complete our contact form and one of our Account Managers will reach out to you within 24 hours to learn more about your business and discuss the best available option. 

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We Described “General” High Risk Merchants already on this page, Below is a list of “Specific” Merchants that FinTech Works With:

  • Adult / Book and Video Stores

  • Auto Rental  

  • Airlines & Charters

  • Accounting / Tax Preparation

  • Bail Bonds  

  • Betting (Lottery Tickets, Casino Gaming Chips, off Track Betting and Wagers at Race Tracks)

  • Buying Clubs

  • Binary Options

  • Business Opportunities

  • Casino/Gambling/Gaming Establishment

  • Cellular Sales/Services

  • Charter Services  

  • Check Cashing  

  • Collection Agency

  • Coins, Currency & Collectibles

  • Continuity/Subscription

  • Computer, Tech Support, Maintenance, Repair/Services

  • Computer Network/Information Services

  • Computer Software

  • Consumer Credit Reporting

  • Counseling Services

  • Credit Counseling/Repair/Protection & Debt Reduction/Consolidation

  • Cruise Lines

  • Dating and Escort Services  

  • Direct Sales/Marketing    

  • Diet Programs & Pills

  • Door to Door Sales

  • eCommerce sales (cosmetics, vitamins)

  • Employment Agencies

  • E-Cigarettes & Vape

  • Extended Warranty

  • Fantasy Sports

  • Financial Services

  • Finance Companies

  • Firearm & Ammunition Sales

  • Firearm Auctions

  • Forex

  • Future Services

  • General Contractors (Residential and Commercial)

  • Gift & Prepaid Cards

  • Hair Restoration Services

  • Health Clubs and Spas (Recurring Payments)

  • Herbal & Vitamin

  • High Ticket / Volume Merchants

  • Horoscope, Astrology Psychic Services

  • How to Businesses

  • Import/Export

  • Information retrieval services

  • Internet Pharmacies (Pharma) including Mail Order/Telephone Order

  • IT Tech Support

  • Internet Adult Sites

  • Internet Art Sales

  • Internet Service Providers

  • Internet Tobacco including Mail Order/Telephone Order

  • Internet Electronic Sales

  • Internet Jewelry Sales

  • Investment / Firms/ Strategies / Books

  • Investor Services/Clubs

  • International Merchants

  • Massage Parlor  

  • Media Streaming

  • Medical Discount Membership Plans

  • Merchants on the Terminated Merchant File (TMF)

  • Memberships ( Golf, Health Clubs, Local Community, and Professional Organizations)

  • Merchants using Fulfillment Houses

  • Money Transfer  

  • Mortgage Brokers & Registered Agent Banks

  • Multi level marketing

  • Nutraceutical (Nutra) Trial & Straight Sales

  • Offshore Merchants

  • Online Gambling

  • Online Dating

  • Online Legal Forms

  • Online School & Education

  • Online Smoke Shop

  • PC/Tech Support & Software

  • Pawn Shop

  • Payday Loan Providers

  • Penny Auctions

  • Prepaid Phone Cards

  • Products with Possible Financial Expectations

  • Protection Services

  • Rebate-Based Businesses

  • Replica Handbags, Watches Etc.

  • SEO Services

  • Social Networking Websites

  • Sports Forecasters

  • Scholarship finding services

  • Seminar Broker

  • Talent/modeling Agencies

  • Telecommunication Service

  • Telemarketing / In/Outbound

  • Ticket Brokers

  • Timeshare

  • Travel-related Arrangement Services

  • Travel Agents/Tour Operators

  • Vitamin/Supplement eCommerce

  • Water Filtration/Purification

  • Web Design/Developers/Hosting

  • Wire Transfer/Money Orders