Running a high-risk business can make payment processing seem like a difficult obstacle to overcome. If you've ever questioned why your fees are elevated or why chargebacks are so troublesome, know that you're not alone. Let's go through some of the primary obstacles high-risk businesses encounter in payment processing - and, most importantly, how to handle them.
As a high-risk business, one of the initial observations you'll make is that payment processors frequently impose higher fees on you. Transaction fees might reach 3-6%, and in addition to that, they may levy setup fees, monthly charges, and potentially penalties if your chargebacks become excessive. At times, it may lead you to question whether you're earning less than what you're paying!
The most important thing is to be open and honest. It's important to avoid signing up with a payment processor that conceals fees in the small print. Ensure that you select one that is clear and straightforward about all their expenses - companies such as PaymentCloud or Durango Merchant Services serve as excellent examples. They specialize in working with high-risk businesses, so you can be confident that they have experience dealing with these challenges. Additionally, don't hesitate to engage in negotiations. As your business expands, you may have some leverage to secure better rates.
Chargebacks can be a nightmare for high-risk businesses. They are more common in high-risk industries due to fraud, customer disputes, or buyer's remorse. If chargebacks accumulate, not only do your fees increase, but your processor may also freeze or close your account.
The key is to focus on prevention. Several high-risk payment processors provide features such as chargeback notifications and fraud detection tools. These tools can help identify issues before they escalate into full-fledged chargebacks. It's also important to ensure that your refund policy is clearly communicated to your customers—avoiding confusion can often prevent a lot of trouble. Additionally, there are services like Chargeback Gurus that can assist you in analyzing and disputing chargebacks if you prefer a more hands-on approach.
Finding a payment processor that is willing to accept you as a client might be quite challenging. If you attempted to register with popular choices such as PayPal or Square, you may have faced direct rejection or, even worse, had your account shut down within a few months. This is because these companies are not equipped to accommodate high-risk industries.
Seek out payment processors that focus on high-risk industries. Businesses such as PaymentCloud or Host Merchant Services are familiar with the specifics of your field and won't panic if your chargebacks increase or if your business encounters difficulties. These providers recognize that high-risk businesses have unique requirements and won't terminate your services at the first sign of trouble.
Even if you manage to locate a quality processor, you may observe that payments take longer to reach high-risk businesses. If you're in need of your funds urgently, this delay can be quite frustrating, particularly when cash flow is limited. Payment processors frequently hold on to funds for extended periods with high-risk businesses in order to safeguard their own interests, leaving you in a waiting game.
Some payment processors provide quicker payout times, even for high-risk industries. Ensure that you inquire about payout schedules before finalizing any agreements to avoid any surprises. Certain providers may even be able to provide funding on the same day or the next day. Additionally, if you can maintain low chargeback rates and establish a positive history with your processor, you may eventually be eligible to receive your funds more expeditiously.
Imagine this scenario: one morning, you attempt to log into your payment account and find that it has been frozen. There are no payouts, no transactions—nothing at all. This occurrence is more common than you might expect for high-risk businesses. If payment processors perceive anything they deem risky—such as chargeback spikes or suspicious activity—they may freeze or even close your account.
To maintain a positive account status, it's crucial to handle chargebacks diligently and ensure all activities are ethical. Always maintain transparency with your payment processor. Collaborating with a specialist in high-risk industries can lower the risk of sudden holds as they are better equipped to manage the fluctuations in your sector. It's wise to have a secondary payment processor as a contingency plan in case one account is frozen, allowing your business to continue uninterrupted.
High-risk businesses frequently encounter another challenge, which is a limited number of payment options. Working with high-risk companies makes mainstream processors hesitant, potentially restricting your capability to provide services such as credit card payments, ACH transfers, or even modern alternatives like cryptocurrency.
Seek out a high-risk payment processor that provides a range of payment options. Companies such as BlueSnap or HighRiskPay enable you to receive payments through various channels, including credit cards, ACH, and cryptocurrency. This offers your customers greater versatility and has the potential to increase your conversion rates. By offering more choices, you enhance the likelihood that customers will find a payment method that suits their needs.
Customer support is often an overlooked aspect that deserves more attention. When issues such as delayed payouts or chargeback disputes arise, prompt and dependable assistance is essential. Regrettably, numerous high-risk business processors are notorious for inadequate customer service, which may leave you unsupported during critical times.
When selecting a processor, it's important to consider more than just the fees—take into account their customer service quality as well. Certain companies provide a dedicated account manager who possesses a deep understanding of your business. This ensures that when issues arise, you won't be dealing with unfamiliar customer service representatives. PaymentCloud and Soar Payments are two processor examples recognized for their excellent customer support.
Running a high-risk business can be quite challenging, especially when it comes to payment processing. However, facing these difficulties head-on and knowing how to deal with them can have a significant impact. The important thing is to select the appropriate payment processor – a provider that understands your specific industry, offers tools to manage chargebacks, and delivers robust customer support. It's crucial to invest time in thorough research and not settle for anything less. By having the right payment processor on your side, you'll be better prepared to overcome the unique hurdles that come with running a high-risk business.
At Offshore Unipay, we provide innovative and reliable payment processing solutions tailored to your needs. Contact us to learn more about our services, get updates, or discuss your specific requirements. We're here to help your business succeed with excellence and innovation.
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