As a business, it’s imperative that you find the right partners to help you navigate your way through a very competitive industry. This is especially true for financial services that will help you process payments conveniently while making sure that your customer’s financial information is protected at all times.
But if you’re one of those businesses that are tagged as “high-risk merchants,” you might be struggling to find the right financial service partner just because it has become a norm for banks and other major financial institutions to shun businesses like yours.
The good news is that reliable payment processing providers like First Card Payments now offer opportunities for high-risk businesses to get a high-risk merchant account that will enable them to process debit and credit card payments safely and securely for their customers.
What is a high-risk merchant?
Financial institutions categorize a business as high-risk mainly due to a higher risk for fraud or chargebacks and a big factor for this is the industry that you’re in, the types of products that you sell, or the nature of the business itself.
You can also be considered a high-risk merchant if you have a high transaction volume, you’re a new business, you’re in a high-risk industry, or you’re accepting international payments.
Why do legal businesses struggle to find financial services partners?
Although digital payments have only been introduced to the market over the last few years, the struggle for businesses to find the right financial service partner has existed for decades.
More than 20 years ago, a Republican congresswoman from Iowa named Jim Leach started a crusade against online casinos where she wanted the United States chartered banks to make it illegal to process payments for these businesses even if most of them are legally operating and recognized in their areas.
There was also “Operation Choke Point” that ran from 2013 to 2017 that focused on banks offering services to businesses that were tagged as high risk for money laundering or fraud including those obvious Ponzi schemes and racist materials. But this project was discontinued in 2017 after being accused that it targeted legally operating businesses which made it harder for them to find reliable financial service partners.
Although there have been significant changes to these efforts, a lot of businesses continue to struggle in gaining access to a proper payment processing system, especially those from disfavored industries.
Even new industries like cryptocurrency face the same challenges where they either find it hard to get a merchant account or they need to pay high fees just to get approved for one.
A lot of businesses still face the challenges of being tagged as high risk even if they operate legally. Despite that, there’s hope for the future as small businesses find alternative financing and more payment processors are offering good options to improve their business process through streamlined payment processing systems that will benefit them and their customers.
