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High Risk Credit Card Processing: What You Need To Know

If you’re engaged in a “high-risk business”, you will be needing high-risk credit card processing. Sad to say, this usually means more expensive fees both in initial cost and in setting up your account as well.

If you wish your business to thrive, you need to accept credit cards as a method of payment. Thus, you need a merchant account, something you obtain from a bank. The high-risk label and more expensive fees are the bank’s defensive strategy for acting as your processor and taking on the increased risk for doing so.

Examples of high-risk industries include gaming, high-priced electronics, adult entertainment, or simply operating in the gray market such as selling CBD supplements or oil.

What else do you need to know about being in the high-risk category?

More Fees

As mentioned, being labeled as such will mean higher fees than those operating in regular industries. This is because of the assumption that your business will be producing a lot more chargebacks than a non-high risk business. Processing companies do not like chargebacks because they cost the company a lot more money, hence, charging you more fees upfront as a way to offset this risk. Think higher initial set-up fees, more monthly fees, and more processing fees.

You will also be asked to pay fees for chargebacks. This fee will cover the administrative costs that come with processing the chargebacks. So the more chargebacks you receive, expect to be charged higher costs and fees. This may eventually lead to profitability problems for your business.

How to Manage Your High-Risk Account?

Card being used to pay

The key is in keeping your chargebacks to a minimum level. You can do this by:

  • Implementing fraud filters. There are two fraud or security filters that you can use in the market today: Card Verification Code and Address Verification System. Having these filters in place will lessen the possibility of fraud.
  • Making your Statement Descriptors Very Clear. If you have a poor transaction descriptor, there is a possibility that your customer simply did not recognize the transaction on the statement. Your descriptor should ideally include your website or product name to lessen confusion.
  • Having a flexible refund process in place. Have an easy and reasonable refund policy so that your customer can get a refund within a certain time frame. Make sure you have a good customer service system in place with your service hotlines disclosed properly. You can even include your contact information on the descriptor to lessen the hassle on the part of your customer.
  • Understanding the reasons. Finally, be proactive enough to know why there are chargebacks. Simply being aware of your customers’ reasons for chargebacks helps a lot in preventing more from occurring in the future.

It is certainly challenging to maintain a high-risk account considering the exorbitant fees you need to pay. There are, however, ways you can manage your chargebacks so that your fees can still be kept to a reasonable minimum. Ensure that your high-risk business stays in the game by managing your account properly.

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