First Financial Merchant Services

What Are High Risk Merchant Services?

High risk merchant services business on computer.
Maybe you’re just starting a business and you are considering a high risk merchant services account? Perhaps you sell a niche product? Regardless of what the case may be, you’re having trouble obtaining traditional merchant services. Put simply, the bank finds you to be too big a risk.

Fortunately, there’s an alternative available: high risk merchant services. What do these services entail? What are their benefits?

We’re going to get into all of that and more below. Without further ado, here’s everything you need to know about high risk payment gateways and payment solutions.

What Are High Risk Merchant Services?

To understand the concept of high risk merchant services, you must first understand the concept of traditional merchant services. Merchant services refer to the services that a bank provides so that a company can accept different types of payments.

In most cases, this refers to the acceptance of debit and credit cards. However, it also covers the realm of online payment processing.

With traditional merchant services, there’s generally a credit score requirement that must be met in order to receive such services. In addition, the provider of such services must find that your business is viable enough to justify providing such services. Therefore, if you sell a niche product, your application for such services might be denied.

Effectively, the service provider considers your business venture to be “high risk”. In other words, they’re not confident that your business is going to make enough money through their services in order to justify them giving them to you.

This is where high risk merchant services come into play. These services are available to essentially anyone, regardless of credit score, products sold, or otherwise. They ensure that you’re able to make card transactions, and thereby help to either improve the success of your business or, at the very least, keep it afloat.

Who’s Considered High Risk?

We’ve discussed what high risk merchant services are. Now, let’s discuss the types of companies that might need them. In particular, there are companies that bring more risk to the table than the typical company.

They possess a variety of characteristics. Let’s discuss them in detail below.

Those Who Sell High-risk Products

There are low-risk products and high-risk products. Low-risk products are things like clothing, books, and office supplies. They sell on a regular basis and will almost certainly trigger regular card payments.

High-risk products are things like software, tickets, and electronics. They don’t sell quite as often, and also have a higher risk of return. This makes them riskier for payment processing companies to get behind.

Those Who Sell to High-risk areas

Another group that might need high risk merchant services is those who sell their products to high-risk areas. This includes, in most cases, impoverished or underdeveloped countries.

If the majority of your sales come from these countries, you’re going to have trouble obtaining a standard merchant account. As such, you might have to go with a high risk account instead.

Those Who Receive Many Chargebacks

Does your company sell a product that results in a lot of chargebacks? If so, you might have to get a high risk merchant account as opposed to a standard account. This is because chargebacks can make it difficult for merchant service providers to financially justify providing their services to you.

Those Who Offer Subscription Payments

Do you sell subscriptions? If so, there’s a decent chance that you’ll need to use high risk merchant services as opposed to standard. Subscriptions leave a high risk of missed payments which can financially hurt the service provider. Therefore, the company is forced to take on more liability.

High Risk Merchant Services Benefits

High risk merchant services are beneficial in a number of ways. Some of their biggest benefits include the following:

Available to Anyone

The biggest benefit of high risk merchant services is that they’re available to everyone. It doesn’t matter whether you have bad credit, experience an abnormal number of product returns, sell a niche product, or otherwise, you can get your hands on high risk merchant services.

This is simply not true of traditional merchant services, which come with credit requirements and are dependent on the acceptance of banks and other rigid financial institutions.

Worldwide Processing Capabilities

Another big benefit of high risk merchant services is that they come with worldwide processing capabilities. As such, regardless of where your customer is located, you will be able to accept their credit cards and debit cards.

This opens you up to an endless number of clients, all of whom can contribute to keeping your business thriving.

Work for Both Debit and Credit Card Payments

Whether your customers pay with credit or debit cards, high risk merchant services will accommodate you. These services work with cards from a variety of brands, allowing you to accept payment from as many people as possible.

Secure Processing

Not only are high risk merchant services worldwide in their capabilities but they’re also highly secure. Regardless of where the payment is made, it will be encrypted so as to allow for as much security as possible.

This means that there will be almost no chance of data theft. That, in turn, is good for the reputation of your company.

Need High Risk Merchant Services?

Are you in need of high risk merchant services? If so, look no further than First Financial. We provide such services to countless clients in countless industries.

Regardless of your credit score and regardless of the products you sell, we can provide you with high-quality merchant services at reasonable interest rates.

Contact us now to discuss details!

Cash Discount Processing: Everything to Know

Small business owner offering cash discount processing

Cash Discount Processing: Everything You Need to Know

Cash Discount Processing is the wave of the future. According to a Federal Reserve study, people use cash for approximately one in five transactions in the United States.

Some stores and businesses offer a cash discount program. These businesses take a certain percentage off the total purchase if customers pay with cash.

Any business owner considering a cash discount program probably has questions. You might wonder how these programs work, if they’re even legal, and how much you can save.

Read on to find out everything you need to know about using a cash discount processing system!

Cash Discount Programs: An Overview

Cash discount programs are a way to offset the cost of credit card fees. Any business or individual who accepts credit cards can offer a cash discount.

Essentially, with this kind of program, customers paying with cash can save a percentage of the total price. When customers use a credit or debit card, they cover the cost of the transaction fee.

Your processor will give you a lower rate on processing fees if customers pay with cash. Some people prefer to pay with cash, and these customers are more likely to choose your business if you offer a cash discount.

Businesses that offer a cash discount can also use it to attract new customers. Not only can you use this program to save money on your transaction fees, but you can also generate more business.

How a Cash Discount Program Works

Many transactions use credit cards, especially with online sellers, but the fees can make businesses less profitable. Cash discount programs are a great way for businesses to encourage customers to pay with cash.

The simplest form of a cash discount program is something like, “If you pay with cash, you get 10% off your purchase.”

This type of program is useful for any business that accepts credit and debit cards, but some are better suited for them. Businesses with a product or service that rarely changes are good candidates for a cash discount program.

Examples of businesses that should consider cash discounts include:

  • Restaurants
  • Cafes
  • Service businesses (plumbing, HVAC, pest control, etc.)
  • Medical clinics
  • Automotive shops
  • Salons

Businesses with a more extensive inventory might have a harder time implementing a cash discount. Large retailers, for example, have a constantly changing inventory that makes it more difficult.

The reason certain businesses are better suited for cash discounts is because of how pricing works.

When you offer a cash discount, you include the cost of credit card processing in the advertised price. If a customer pays with cash, they pay a discounted price.

To cover the cost of card processing, businesses must alter their pricing structure. A business that moves a large volume of products will therefore have to work much harder changing their prices.

As a result, food vendors and businesses with a small selection of services are a better choice for this program.

Surcharges vs. Cash Discount Programs

Many business owners confuse cash discounts with surcharges. However, cash discounts and surcharges work in very different ways.

It’s important to understand the differences before you decide which one is right for your company. Cash discounts are easier and more common, and have fewer legal issues.

A surcharge is a fee added to the advertised price if a customer pays with a debit or credit card. With a cash discount, on the other hand, customers paying with a card pay the advertised price.

This makes cash discount programs more flexible merchant services overall. They can be implemented with minimal changes to your business model (and without any need for additional equipment).

Surcharges can also be difficult if they’re applied across multiple products or services. For example, products with varying amounts due at checkout can confuse and frustrate your customers.

Cash discounts also allow users more flexibility when planning out their purchases in advance. They also don’t require any change in customer behavior, such as making sure they know about all applicable fees.

With a cash discount, customers view your payment options as a chance at saving. With a surcharge, it seems more like a hidden fee.

Are These Types of Programs Legal?

When you offer different prices to customers based on their payment method, it can raise legal questions. Businesses may be hesitant to implement a cash discount because they aren’t sure if it’s entirely legal.

Businesses using a surcharge are more likely to run into legal issues. Although legal in most states, surcharges for credit cards have to be clearly displayed at the point of sale.

Some states have outright bans on surcharges for credit card transactions. Cash discount programs, however, are legal anywhere in the United States.

With a cash discount program, the vendor adjusts the price of each product or service to account for the cost of processing fees. When a customer pays cash, the vendor applies the discount at checkout.

Because the customer never pays more than the advertised price (except with regard to taxes), there are no legal issues.

Save on Credit Card Processing

A cash discount program is one of many tools available to help you save money and make your business more profitable. Unlike a surcharge, customers don’t pay an added fee when they pay with a credit card.

Instead, customers who use a card pay the advertised price, while cash-paying customers get a discount. Businesses can use their cash discount program for advertising while saving money on credit card processing.

First Financial offers merchant services with 24/7 customer support. If you need a way to accept credit cards, we can help, even if you’ve been turned down by traditional banks.

Contact us today to learn about our financial services!

First Financial® | Corporate Headquarters | Mailing Address: First Financial 2305 Historic Decatur Road, Suite 100, San Diego, California 92106

Client Service Center:  Main: 1-800-315-7791 Fax: 1-800-215-0217

First Financial® & First Financial Online® are Federally Registered Trademarks

©1996-2022 First Financial®, All Rights Reserved. All other products and company names are trademarks of their respective companies. First Financial® does not provide any investment, financial, tax, legal or other professional advice. We recommend that you consult with financial and tax advisors to understand the risks and consequences of buying, selling and holding Bitcoin.*Not all lenders can provide up to $5,000. Must be 18 or over, outside of New York, South Dakota and Hawaii to sign up for a Bitcoin Savings Account.