High Risk Merchant Accounts for Payment Processing

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October 11th, 2018

So, How Much High Risk Processing Costs?

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What’s a good rate for credit card processing? Answering this is next to impossible at times because rates are business-specific. The fact turns even true in matters of high risk businesses, such as gambling, gaming, traveling, adult entertainment, pharmaceuticals, technical support, vape shops and more. Getting a fair idea about average costs for multiple business and industries types are possible though.

Certain processors working with high risk businesses have a few rough numbers to let one know whether they are paying anything extra.

Estimating Rates Of High Risk Merchant Accounts

Actual fees and rates to be paid are based on a number of factors; hence, high risk businesses must expect fees for credit card processing to start close to 3.5% for business that’s reputational and comes under “less risky” high risk category.

After this, rate can increase to 10% or more. As far as the highest costs are concerned, they are meant for riskiest industries or businesses that depend on offshore merchant service providers.

Words From High Risk Processors

PaymentCloud, a high risk processor says that for a high risk merchant account, average rate is 3.95%. This rate counts for transactions that are considered qualified by the company. Talking about mid-qualified or non-qualified transactions, they cost an average of 100 basis points additionally.

While setting the rates and fees, processors take into account many variables. For instance, in terms of high risk business, industry is a major factor to consider. It’s important to know that even in the high risk category; there are businesses that have lower risk as compared to others.

For businesses like e-cigarette and vape, high risk processors set price on the lower end of high risk rates only if the particular business is able to present its current processing statements and documentation.

eMerchantBroker, another high risk processor, concludes that businesses who have hige average tickets and industries who suffer from excessive chargebacks have rates that start at 3% + 15 cents for every transaction along with:

  • PCI compliance fees
  • Mothly fees, and more

Also, businesses falling under riskier industries are charged with higher costs.

When A Rate Is Considered Extra High?

In case of sticker shock over high risk processing rates, it’s obvious to wonder if rate is the best thing to do. However, checking current price against high risk quotes is easy with CardFellow marketplace. Competitive quotes placed through this system give a promising baseline regarding the lowest pricing for the business.

It’s suggested to expect between 3.95% – 4.95% for rates that are qualified. However, looking for other options is a smart move if rates of processor are higher. In the words of PaymentCloud, though 10% or more is not something out of the box for ultra-high-risk offshore merchant accounts but these rates are not expected for domestic merchant services. Due to this reason, things are doubtful if rates on domestic account are 10% or more.

A business is possible to be extremely high risk in certain cases. Owing to this reason, if it is rejected by various high risk processors before finding someone who agrees to provide a merchant account, it has no option other than paying the asked fees without any negotiation. In such a case, forming a powerful processing history, working to keep the chagebacks low and shopping again after months is the way to go.

Experts Tips To Open A High Risk Merchant Account

With these 8 strategies in consideration, starting with the account gets a lot easier:

1. Find providers who specialize in high risk merchant account
2. Be careful about the costs
3. Identify the processing needs
4. Buy the right equipment
5. Access comprehensive Ecommerce support
6. Negotiate the pricing
7. Ask for month-to-month contract
8. Look out for cost-effective balance

Path to high risk merchant accounts is undeniably bumpy. Still, by being careful when moving towards it and keeping the above information in mind, things can be simplified to a large extent.
If you have any question or doubt, get in touch at your ease.

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