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High Risk Merchant Accounts: What Makes A Business "High Risk"? - YouTube
Channel: Leap Payments
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Today, we will be covering the key distinctions
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of what may classify your business as high risk
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in terms of banking and merchant services
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By the end, you’ll have the knowledge needed
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to identify your business’ risk level
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and be successful in a high risk industry.
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When it comes to getting approved for a merchant account,
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being classified as a high risk merchant could
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have significant implications for your business.
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Just by knowing if your business industry type
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is considered high risk, you can narrow your search
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for a quality merchant service provider and
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prevent a vicious cycle of application declines
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and seeking new providers. While some business
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industries seem obvious to be categorized as high risk,
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there are many, less obvious factors that come into play.
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Banks use these factors to assess your business’
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risk for credit card processing.
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They look, not just at what you sell,
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but also at the potential for fraud, chargebacks,
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large transaction sizes and
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long term deliveries that can open up a business
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to potential account losses.
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Businesses may also be classified as high risk because of:
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Selling products that are on the fringe of being illegal.
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Blacklisted because of fraud or bankruptcy.
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Delayed delivery from time of purchase.
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Business’ owner having bad credit.
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Not registered with local regulatory agencies.
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Businesses structured around trial offers or free offers.
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And, infrequent processing.
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Even if your business has a spotless record,
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many banks judge risk based on the actions
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other companies and their industry as a whole.
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Here are some common high risk industries.
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Getting approvals for a merchant account is usually
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a straightforward task for non-high risk merchants,
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with rates, fees and features being the main concern.
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However, high risk merchants have to hunt for a provider
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that is connected with a bank that accepts their industry type.
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This may sound simple enough,
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but often, merchant service providers will claim they can
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handle certain high risk accounts, even if they can’t.
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This can waste up to a month of your time
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waiting for a decline and result in a hit against
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your credit report with nothing to show for it in the end.
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Okay, so let’s say you do finally find a
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proper provider that takes your business type.
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As a high risk merchant there can be some conditions
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or limitations for your accounts approval,
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such as:
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Fixed, lower processing limits
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a reserve withheld on transactions
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limited processing options or gateways,
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and higher processing rates
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Now, these limitations should not be a deciding
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factor as to whether or not you should get a merchant account,
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since not accepting credit cards is often a
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worse scenario to be in.
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Rather, these are key items that you, as a merchant,
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need to be knowledgeable about
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for when you are looking for the best
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high risk merchant account provider.
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Understanding all the different aspects of high risk
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merchant services will help you find the best processor,
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avoid drawn out declines
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secure a long term solution.
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For more detailed information on how to get approved
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for a high risk merchant account, see our video,
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here, for a step by step, deep dive.
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Leap Payments has partnered with tens of different
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banks that all approve various high risk merchant accounts
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so we can cater to nearly any industry.
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We believe in open and honest credit card processing,
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that’s why we’ll tell you if we can support your business’ merchant account upfront,
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give you an honest assessment of your rates and fees
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and offer you the lowest rates available.
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