Processing credit card payments
You might have what you consider a brilliant idea for a business. Perhaps it is an innovation on how to offer the public a service or a product. When you go to apply for your merchant accounts, however, you find out that it might be more difficult to qualify than you thought. Even with a good credit history, plenty of collateral, and a proper business plan, there are some niches that are just considered “high-risk” by credit card processors.
Any type of company that sells medicinal products online is labeled as “high-risk.” Because there are so many people selling scam products that are supposedly medical in nature, this entire industry is painted with the risky brush. You might want to sell perfectly legitimate products, but as pharmaceuticals have a very high rate of disputed payments, companies that sell them will continue to pay more for the privilege of processing payment by credit card. For more information, visit their website at processing credit card payments.
Not quite a pharmaceutical and still illegal in 36 states, medical marijuana falls into a strange category. This situation makes it very difficult for dispensaries to qualify for any type of merchant account. There are some credit card processing firms that are actively seeking out medical marijuana businesses in order to provide the services they need, and it pays to look for such a company if you want to accept plastic at your store.
This one is pretty simple to understand. While most forms of adult entertainment are legal, they still have a stigma attached. Picture the scene; a man purchases a movie to watch online, his wife sees the charge on the credit card bill and questions him. He denies any knowledge of the charge and she calls up to dispute the charge. As the credit card company will almost always side with the customer, the refund will be issued. Talk about a business challenge.
Whether it is software, movies, or gaming, these products also incur a high level of disputes. People rarely read the full description, are surprised by what they get, and refuse to pay. Once again, this leads to credit card processors labeling such enterprises as “high-risk” and charging more or refusing to provide service.
Online gambling, auctioning, debt services and dating sites are also considered to be riskier than traditional businesses as far as the credit card processing business is concerned. This is scarcely a comprehensive list and if you find that you are being turned down because your business model is considered more risky than most, talk to the representative about what you can do to improve your chances of qualifying. Small changes in your business plan, a slightly different tack, and you may just find yourself being approved for any number of merchant accounts. Sufficient changes to your plan may even lead to your qualifying without that dreaded “high risk” label and the consequent additional expense.