Transactions done by credit and debit cards is called a merchant service. It is transaction done electronically. This payment may be performed through an account set up by the business holder. It opens the door to numerous payment methods, makes card transactions easier, and provides cashback, chargebacks, and other benefits. In this article, Tailored Pay will provide more information on this subject to help you understand more about merchant accounts and payment processing.
Business owners are required to have a merchant account with the provider. This account may be held directly or indirectly through a referral partner. Merchant service providers act as the intermediary between those who need to purchase goods and the companies that need funds. There is an elaborate process involved in the simple transaction. Once the issued card is used, the payment request is then sent to the acquiring bank (where the merchant’s account is registered). This request passes through a payment gateway, and the authorization is then sent to the right card provider such as Mastercard and Visa. Once it is approved, it redirects the final authorization to the issuing bank. After this authorization is complete, it is traced back to the user and releases a confirmation code, confirming the transaction.
What Makes a Business High-Risk?
First things first, how are businesses classified as high-risk? What do we understand about high-risk? Is it the threat of a market crash? Theft? The answer is both yes and no. Considering how fast technology has grown, it has branched into two ways. One where our day-to-day activities become more simple, faster and efficient. The other branch, however, is one where flaws, defects, and loopholes are detected in these technologies. The more efficient these online transactions are, the riskier and more sensitive it is.
High-risk businesses are defined as those that deal with high amount transactions and cash returns (online), businesses where potential for fraud exist, organizations that deal with products likely to be considered illegal, and so on. For reference, some of these businesses involved in adult products, firearms, guns, tobacco, and cigars. These businesses are considered high-risk because large transaction amounts online are considered dangerous, because sometimes money isn’t even received, nor the services nor goods delivered. High-risk products might get banned and the company can get into a huge debt. Since a large amount of money is involved online, there is also the possibility of fraud. Multi-level marketing also places a company at risk.
High-Risk Merchant Service: What is It?
A high-risk merchant service is an account through which transactions are done in an organization in exchange for goods and services provided. This account is specifically created for high-risk businesses where huge sums of money is involved online or electronically. No industry standard actually defines or decides whether a business is high-risk or not since this definition is mostly subjective. For some reason, it might feel that the line or the sector a business is associated with is risky. But some factors can push businesses towards the danger zone, including:
Work Location –work location is important, which is why it is necessary to have a proper working institution.
Personal Credit –A good credit score is beneficial for businesses for the long run. While a good credit score can make businesses look favorable, it is not easy to get certified to use such an account. Once approved, however, it opens the doors to numerous payment methods, faster transactions, and other benefits associated with it. It also has numerous fraud prevention and security maintenance methods.
High risk merchants are always on the lookout for a provider involved with a bank that accepts its high-risk industry type. A proper provider, like Tailored Pay, provides processing services for a broad range of industries. Once a business finds the right provider to authorize their bank statements, there will be certain limitations faced due to the risks involved such as lower processing limits, high processing rates, limited processing options, and the like.
What is Included in High-Risk Merchant Services?
Businesses may find it promising to avail high-risk merchant services. But it is important to find out first what they can do for you. With the many benefits high-risk merchant services provide, there are a few things you need to keep in mind. High-risk merchant services usually include the following:
1. High-security level and fraud protection –this is made especially for high-risk businesses and already provides high-level security. It protects businesses from fraud, prevents problems, and transaction failures.
2. High chargeback protection –this service protects businesses from high chargebacks unlike low-risk merchant service accounts. But it would be erroneous to ignore chargebacks, as continuous chargebacks can result to termination.
3. Global coverage –this helps high-risk businesses do international transactions. It grants them better exposure that eventually benefits their business exponentially. Attracting a large-scale target is also a plus.
4. Less chances of account termination –low-risk merchant service accounts run the risk of getting terminated due to chargebacks. High-risk accounts, on the other hand, absorb few chargebacks and do not risk getting terminated.
5. Shortened processing time –due to large-scale and repeated transactions, processing time is shortened, which leads to faster and smoother transactions.
To conclude, today’s present mode of transaction is rather technologically advanced. When you factor in that all he flaws and loopholes the methods can face can be avoided but not fixed, more new ways come up, and new problems also show up. Online transactions are fast and efficient, and the speed and reduced processing time makes businesses grow faster. The age of physical payment modes is still alive and well because not all parts of the world have the required facility to do online transactions. There are benefits to both online and physical transactions. To survive in this era, businesses need to rely on facts and play carefully and take advantage of every situation. The same applies to hi-low risk merchant services. There are huge opportunities offered by both, but there needs to be proper research done before investing. Tailored Pay can help make this task easier.