Finding the Right High Risk Payment Gateway a merchant account for business

Recognizing high risk categories

Businesses can be labeled high risk for a number of reasons, such as high chargeback ratios where velocity exceeds risk thresholds, or in high regulatory industries with the potential for reputational risk, or in purely risk markets. Generally, sectors or industries considered high risk payment gateway for financial institutions are entertainment products, gaming or gaming, travel, subscription services, cryptocurrency, debt collection, telemarketing etc., and because as labeled high risk type industries are considered volatile or fluid, on average, high risk businesses require a more comprehensive approval process or require uniquely designed payment services.

What to Consider for

When searching for a high risk payment gateway and merchant account, look for providers that offer comprehensive anti-fraud services, comprehensive chargeback management, and secure transaction protocols. Make sure to evaluate their PCI DSS compliance record, availability of tokenization, and that they monitor transaction activity in real-time. For businesses that are looking to sell internationally, multi-currency support will be beneficial as well as API integration with plans to use payment services in their business systems.

Fee Structure and Pricing

High-risk merchants typically face much higher processing fees than traditional businesses. Many high-risk merchants will be charged 3-8% per transaction compared to the more traditional 1.5 - 3% rates. Be sure to factor in all aspects of the fee structure including any upfront costs, monthly fees, chargeback fees, and reserve amounts. Some payment processors have rolling reserves which can hold 5-20% of transactions for 6-12 months for protection against losing funds. When evaluating payment processors, try to look at cost of ownership instead of the costs of the transactions.

Approval Rates and Underwriting Process

Payment processors vary in their risk tolerance and approval criteria. Do some research and find payment processors that specialize in your industry and have experience with its issues and regulatory restrictions. Prepare all documents that you can (business licenses, financials, processing history information, detailed business plan, etc.). The more transparent you are about your business model the more likely you will get approved, and it builds an element of trust with the underwriters.

Foldering and Industry experience

Choose providers with a proven background in your industry. Industry-specialized processors will have experience with compliance requirements, normal transaction flows, and how to safely mitigate risk. They will also guide you on regulatory changes, industry best practices, and how to optimize for your specific industry type. This expertise will greatly aid you in an account review, a dispute, and scaling your business.

Tech Capabilities and Support

Assess tech capabilities, including APIs, plugins, and ease of integration. Evaluate if the gateway supports the e-commerce platforms you intend to use, as well as the recurring billing systems and mobile platforms. Look at the quality of the documentation, the availability of developer documentation, and the availability of technical support. A seamless integration will allow you to take your time moving your business to a new gateway and reduce disruption in processes. A seamless integration will also speed up your time to market.

Chargeback Management and Dispute Resolution

For high risk businesses, chargeback management is important to have. Look for providers that have systems that will help you manage or prevent disputes before they start, an automated dispute response system, and sophisticated reporting. Many processors also have chargeback guarantees or chargeback insurance programs to limit your financial exposure. Also, review the provider's history of dispute resolution, including how quickly the provider responds to disputes, since late responses mean that you may as well concede defeat.

Reliability and Uptime Guarantees

Payment processing downtime is lost revenue; therefore, uptime must be the most important factor for all merchants. Review the provider's website for uptime stats, redundancy features, and disaster protocols. Ideally, you also want a service level agreement (SLA) that guarantees a minimum of 99.9% uptime. Look at the geographic distribution of processing centres and their backup systems to see if processing can continue if frontline processing is down.

Don’t forget to look at all your options

Create a weighted scoring system to score the vendors you are reviewing across all factors that are important to you, including likelihood of approval, total cost, tech capability, industry experience, and quality of support. Ask for references from similar businesses and conduct your due diligence. You may also want to complete a trial or pilot program prior to a multi-year contract.

In high risk businesses, the lowest cost option can be the most expensive option; take your time and rely on your instincts on which partnership will help you enable your long-term growth objectives, while keeping you compliant and your exposure at a minimum Trinity Consultings. Each time you procure a merchant account and payment gateway as a bundle, you will have some 'competitive leverage' to grow for you and your customers.