How to Determine if You Need a High Risk Merchant Account

Many retail merchants, restaurateurs and new business owners pursuing their company's Merchant Credit Card Account were often declined because of their "Merchant Type" category. The regular banks declined merchant who did not fit the strict low risk criteria of:

1. 2 years in business
2. 100% credit card swipe
3. Store Front - own or lease a physical building, and
4. Good credit

Fortunately, US Business Finance Corp has years of experience helping businesses that are in the medium to high risk category obtain merchant accounts. Let us help you expand your business!

Many banks treat any account that is not low risk as a high risk merchant account. This created the situation where many of the "middle risk" merchants found themselves lumped into the higher risk and sometimes "extreme risk" merchant category and bearing an unnecessary burden in order to maintain their merchant account.

US Business Finance Corporation understands this situation and works to help middle risk merchants to secure accounts better suited to their risk level. We also work to help high risk merchants secure an account that matches their level of risk and work to minimize their risk and improve their record..

Middle risk merchants might be included in the following list:

1. Internet sales where most products are drop shipped
2. Products sold and delivered within 90 days
3. Bail Bonds
4. Telecommunications
5. Software sold on a CD
6. Internet Electronics such as Ipods
7. Internet sale of diamonds and jewelry with store front
8. Fair credit score merchant with non-face to face sales
9. Network Marketing individual distributor
10. Internet services/hosting
11. Furniture stores
12. Computer stores
13. Door to Door Sales
14. Sales through conducting parties
15. Nutraceuticals sales over the Internet)
16. Internet sales of gold and jewelry
17. Internet Art Sales
18. Internet sales of collector coins or stamps
19. Weight loss or quit smoking systems
20. Concierge companies

Higher to extremely risky merchants might include:

1. Gambling/gaming
2. Tobacco Sales
3. Adult material
4. Time share sales
5. Stock trading
6. Annual subscriptions magazines and membership fees
7. Internet Computer sales
8. Internet sales of large ticket electronics
9. Internet booking of travel/cruise tickets
10. Network Marketing Companies
11. Dating Internet Service
12. Out-bound Telemarketing
13. Future delivery over 90 days
14. International sales
15. Software downloads
16. Seminars
17. Internet sales of high end Jewelry
18. Poor credit merchant
19. Hypnotherapists, Psychologists, Psychiatrists
20. Credit repair, and
21. Collection Agency

High Risk: What to Expect

Merchants in the higher to extremely high risk profile category should expect to get declined by most companies unless those companies advertise that they approve your particular business type.

When the business type is approved in the higher risk categories, merchants might be asked to withhold a percentage of their processing in a non-interest bearing reserve account to be used against possible charge backs. This helps the processor soften the risk and will often result in the merchant receiving higher volume allowances for their merchant account.

High volume allowances for your high-risk account is a big benefit since it means you will not be capped on the amount of bank card business you can accept. It predicts where the money will go instead of the unpredictable occurrence of the bank suddenly grabbing an arbitrary amount of funds to ease the bank's risky position.

Many High-risk merchants should also expect to pay 1% - 3% higher merchant account fees until they establish a history of transactions. After 6 months, a great deal can be understood from the transaction history and if the merchant's profile is clean (low charge back levels). With a solid history and clean profile, a merchant may negotiate a lower rate on their high risk merchant account. For example, the merchant may negotiate an end of daily reserve requirements or a partial release of money already held against possible charge backs. This is the classic reward for a high-risk merchant who has successfully worked at keeping the risky nature of their business in check.