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7 Things You Should Know About Having a High Risk Merchant Account

7 Things You Should Know About Having a High Risk Merchant Account

Conceptual business illustration with the words merchant account
Having a high risk merchant account is a necessity for some businesses. Learn more about this type of account with these seven facts.

If you have an online business, accepting credit cards as a form of payment is absolutely critical to your success and your bottom line.

But if your business is considered high risk, finding the right match can be a daunting task.

So, what do you need to know about having a high risk merchant account before you begin looking for the right company to serve your needs? Here are nine things you should be aware of before you make a commitment.

1. Determine if Your Business is Considered High Risk

Before you select a merchant processor, you need to know if your business is even considered to be high risk. The criteria can vary widely between providers, but one of the first things they look at is if your industry typically has a high rate of fraud or chargebacks.

If you’re not operating from the United States, this is another potential indicator of high risk. Certain categories like firearms, drug paraphernalia, or even auction sites may also be considered high risk. Find out if you fall into this category first so you can be prepared for the next steps.

2. Prepare for Higher Fees and Longer Contract Terms

If you have a high risk merchant account, you can expect to pay more in processing charges and billed account fees. The reason is that your processor is taking you on as a risk, so they’re passing the cost of that risk on to you.

You’ll also likely have to keep your contract with the processor longer than you would if you were not a high-risk client. On average, high-risk accounts must stay with the same processor for three years or even longer.

An auto renewal clause is usually included which can force you to remain an ongoing customer for periods of a one-year minimum after each renewal. If you want to cancel, you’ll likely get hit with an early termination fee.

3. Check Available Plans for Your High Risk Merchant Account

Merchant processing plans can vary, so shop around until you find one that offers terms you can live with. Traditionally, these fees are charged on something called an interchange-plus pricing plan, although your rates will be higher than a low or no-risk account.

Find out if you can get a flat-rate pricing plan which will make billing a lot easier. If you discover that a merchant processor is charging extremely high per-transaction charges, you may want to steer clear. Compare rates and plans until you find one that’s within a reasonable amount.

4. Be Aware of Rolling Reserves

The term rolling reserves refers to money that is set aside from the proceeds of your sales in order to cover certain expenses. These reserves will help pay for things like chargebacks, and they’re put in place to protect the merchant processor.

Since many high-risk accounts tend to go out business, these reserves are there to cover any unexpected costs to the merchant processing company. If you’re new in business, you can almost guarantee that this is a requirement. However, as time goes on, the rolling reserves should decrease as long as your account remains in good standing.

5. Read the Fine Print

Any reputable merchant processor will give you a contract that spells out all of your fees and terms. Make sure you read this thoroughly before you make a commitment.

Look closely for different clauses that could cause you to pay even more than you expected. Some companies claim to specialize in high-risk accounts so they feel that they can charge their merchant accounts exorbitant fees. Do your homework and never sign anything until you’re completely comfortable with the terms and the cost.

If you’re ever in doubt about a potential merchant processor, ask your fellow business owners who they recommend. You can also read reviews online to find out which ones most high-risk customers are happy with, and which ones to avoid.

6. Security Measures will be Added

A quality payment processor will add some layers of additional security to your account. This can actually benefit you since it will help prevent fraudulent transactions and dishonest chargeback claims.

Requiring things like CVV2 verification is a good thing since it protects you and your processor from fraud. Ask your provider about what kinds of security measures they take to protect themselves and your business from unscrupulous transactions.

7. Develop a Good Track Record

If you really want to lower the costs associated with a high risk merchant account, work diligently to prove your salt. This could mean anything from reducing or completely eliminating chargebacks to consistently showing a profit for a long period of time.

The longer your business does well and maintains its reputation, the better off you’ll be in the eyes of the merchant processor. Some providers may even reward their high-risk accounts with lower rolling reserves over time or even reducing fees as time goes on.

Ask several potential merchant processors what kind of benefits they offer high-risk accounts if they do well. You might be surprised at the progress and positive benefits you can reap once the business is more established.

Success is Possible

Even if you operate a high-risk business, there’s no need to despair. With a few helpful bits of information and a little research, you can find a quality high risk merchant account that will serve your needs well.

Visit our website for more information about: High Risk Merchant Services.

4 Ways to Reduce Your Merchant Credit Card Processing Fees

Credit card processing fees just come with the territory. That customers spend 20 t0 50 percent more when using credit cards should reassure you that accepting them feeds your profits. Use these tips to keep even more of your profits when you reduce your merchant credit card processing fees.

Find the Processor that Wants You

Just as lenders can specialize in certain types of borrowers, processors like to stock their portfolios with merchants that meet carefully selected criteria. They marshal the software and hardware that caters to different transaction amounts and volumes. They may also design their offers by a merchant’s average ticket price (ATP) or lifetime value (LTV). That’s why you should evaluate several merchant processors to see which wants to work hardest for your business.

This said, make sure that processors offering low rates also provide sufficient services and aren’t hiding fees. When you find a possible processor, check its Better Business Bureau rating. Create a spreadsheet and get answers to the following questions:

· What is the total interest rate when including all fees?

· What are the application, cancellation, statement and service fees? Can these be waived?

· Do you require contracts? What are the terms?

· How can I get a lower fee per transaction?

Those not willing to work with you do not deserve your business. Review the answers other merchant account services. Always read the fine print.

Hardware Considerations

Leasing credit card terminal means you’ll end up paying up to 20 times the machine’s cost. Typically, leases run for three to five years. While the terminals cost $200 to $400 up front, leasing can run from $40 to $70 each month. Keep in mind that you can also consider mobile credit card readers that plug into smartphones. These include Paypal Here, SparkPay, Intuit GoPayment and more.

There are also a handful of new mobile credit card readers merchants can consider. These inexpensive devices plug into a smartphone or tablet and allow credit cards to be accepted from anywhere. Examples include Square, Etsy, Intuit GoPayment, Paypal Here, Spark Pay and Amazon Local Register. Evaluate them to determine which fit your sales type and volume.

Remember to Swipe Rather than Entering Manually

When the merchant enters the cardholder’s information manually, they’ll pay more in fees per transaction than if swiping the card. Accounting software Intuit tells us that this is because processors know that manually entered transactions can be more easily hacked by thieves. A credit card’s magnetic strip or EMV chip has the most state-of-the-art security features. When a merchant enters numbers manually, those security features are not engaged. With risk of fraud high with manual entry, processors balance their risk by charging more. If you have to retrain cashiers, do it.

Use Minimum Sales Amounts to Maximize Profits

Convenience stores and restaurants have credit card use minimums for good reason. Small transactions with thin margins can make the sale a money loser. Some merchants worry that a minimum could cut sales. If customers push back on this policy, explaining the costs involved usually helps them understand.

All it takes is putting up a note that says you accept credit cards, but require a minimum sale of $10 or $20. If a customer doesn’t understand, simply explain that the cost of processing plastic can be burdensome.

Today, all businesses must accept credit and debit cards. With all of the additional payment methods requiring a processor, no business can go without a merchant account. The fees involved should not scare you away from providing your customers a wide variety of ways to pay.

Merchant Services Help You Increase Your Sales – Call 1 (800) 950-0212

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2019 Merchant Services Trends

Nothing so constant as change! Business owners that keep up on merchant services trends will delight their customers by offering a wide variety of payment options, convenient refunds and fast processing. Technology advances quickly in all spheres, sure, but the rewards are yours when you work with your processor to keep your buying processes current.

Several Companies May be Serving You
Financial technology (fintech) companies have found cooperating gets them further than competing these days. The smaller companies do the innovating and let the larger ones shoulder the marketing costs in exchange for their technology. Some banks have connected with PayPal to allow shoppers buy in physical stores. Others partner with scanning technology companies to turn images into figures that can debit accounts. The bottom line is when you get your statements, be prepared to see several names, one claiming the other is part of their “group.”

Payment Options Expanding

Hang on to your POS processors! P2P platforms are shaking up the payments industry. Around 20 percent of young adults use Venmo and Zelle at least once a week. Since they remain peer-to-peer, these platforms don’t charge a fee. Their long-game, however, is to develop C2B or consumer to business payments, where the business shoulders the costs. Your merchant services provider should handle these new payment methods to capture these audiences, who are, after all in the prime spending years of 18 to 34.

Rewards Hunting Makes Consumers Fickle
Card issuers have found recently that they can lure customers away from competitors with more and more lavish rewards. They’re offering higher cash-back rewards on purchases and even upfront bonuses. Half of all consumers surveyed will go to the trouble to change cards if the enticement is rich enough. But someone has to pay for this fickleness, and it isn’t the consumer. In most cases, the resulting interchange fees go to the merchant processor and are in turned passed to the merchants. If your processor raises these interchange fees, there’s a good reason behind it.

The New Financiers
Auto and mortgage dealers aren’t the only ones to have financing programs. Today, Home Depot, Overstock and Walmart use PayPal to offer revolving credit lines that let shoppers buy online without a credit card. Newcomers giving PayPal a run for this financing opportunity are Klarna, Affirm and Square. According to a recent survey, 33 percent of American e-commerce businesses will offer purchase financing options in the next year or two.

Credit Card Processing Technology and Devices Changing
Real-time payment processing, cutting-edge anti-fraud measures and API integration advance at lightspeed and that means the credit card machines and POS systems must keep up. Where once, Mastercard and Visa ruled the day, today there are hundreds of payment options, some covered here. Businesses that capture whatever payments options shoppers care to use will prevail. Merchants must stay up-to-date on the hardware and software integrations that help their businesses thrive.

Merchant Services Help You Increase Your Sales – Call 1 (800) 950-0212

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14 Forgotten Items and 14 Places to Sell Them to Pay Off Your Cash Advance

 As much as we want to believe the future is bright, many Americans still struggle to get ahead.  Saving enough for a home down-payment or credit card consolidation can seem daunting.

Renowned online financial planning publisher Bankrate explains that that more than three in four Americans are living paycheck to paycheck and 76 million Americans struggle to keep food on the table. Believe it or not, 80% of American adults are in some form of debt. Even though the majority of us depend on debt to maintain our current lifestyle. Many depend on the cash advance to repair cars and computers or pay the medical bills that keep us earning.

The largest online marketplaces include:

CraigsList: while you set the price, people will still offer less. Still, you stand to get more on craigslist than selling to a pawn shop because you’re selling direct to the end consumer. There’s no middle man needing his or her cut.

Close5:  the reselling newcomer in App form, Close5 only lists people with items within 5 miles of you. Like CraigsList, you can set the price, but buyers will try to haggle.

eBay:  unlike CraigsList, eBay operates on an auction system where you set a starting price and hope it moves up from there. You can also choose to not sell if you don’t get the amount you want. An eBay account is very simple to set up. Keep in mind that you will pay shipping.

Pawn Shops:  the best place if you need cash fast. Managers have certain prices and set margins they must stick to, however, leaving less for you.

Those who looking to escape debt or pay off credit cards or a cash advance should look to the items in their homes they no longer need. This step not only brings down your interest payments, it declutters your home. Review this list for good items to sell and the best outlets to sell them:

  • tools: CraigsList, pawn shops
  • phones: gazelle.com and a GameStop near you
  • video games: GameStop, especially if you’re buying new games or Amazon’s Trade In program, now an eBay company, also takes used video games
  • music, videos and DVDs: Second Spin is the largest re-seller of used DVDs, Blu-Ray and videos. DeClutter and com are other possibilities
  • sporting equipment: A Play It Again Sports store near you. Otherwise, CraigsList, Close5 and pawn shops.
  • appliances: CraigsList, Close5 and pawn shops
  • books: bookscouter.com (especially for text books) and Amazon’s book buyback program
  • clothing: high quality, gently used clothing is best turned over to a consignment store. Popular lines get the best return on eBay or CraigsList. There’s also the new ThredUp which sends you a bag in which to send your old clothes. This outlet tends to prefer designers like Ann Taylor, Calvin Klein, etc.
  • kid’s toys: especially when put together in age-appropriate bundles and sold on eBay, Close5 or CraigsList
  • jewelry: estate jewelry shops and consignment stores. Get appraisals first!
  • music instruments: Local music stores, but they will want a slice of the profit. With Close5 and CraigsList, you sell directly to the parent.
  • furniture: consider Close5 and offer to deliver. Shipping costs for big items will cut into your selling price. If that doesn’t work, look around eBay to see what your piece may be worth and try to get that at a yard sale.
  • cameras: Keh Cameras still takes film cameras, but better prices are for the DSLRs. It also takes vintage cameras for higher prices. Otherwise eBay. Again, look around to see where the better prices are.

 

Steps to Start Generating Cash from Your Forgotten Items

  1. Check unused rooms, basement, attics, trunks of cars and garage. List all of it and beside the list, write the marketplaces you’ll try first and second.

Don’t let your emotional response guide you. If you know you don’t need that item anymore, let it go. It will be of much use for others. Family members, living and dead, will be proud of you for getting your finances in order.

  1. Set up your accounts on sites like eBay and Craigslist.
  1. Take pictures of the items you are about to re-sell. Remember, make it appealing. Try many angles of the picture so the customers can check every side of the item. Borrow a friend’s DSLR to get the best shots and Google how to light items correctly.
  1. Check the shipping costs at usps.com so that so you won’t lose money when shipping an item.
  2. Finalize the list and check the complete list of items you have. Explore how much similar items are going for on eBay, CraigsList, Close5 and others. If you’re selling jewelry, silver or gold, make sure to get an appraisal first.
  3. Create listings for every item. There are many ways to simplify this process, but some find listing on Saturdays or Sundays keep them on track better.
  4. Check messages once in a while. Buyers will have clarifications or questions regarding your product and their messages will come frequently. If you have more bidders, higher prices in the end.
  5. If you already sold and shipped a product, immediately leave feedback for the buyer. Ship the items immediately as possible to avoid negative feedback and win good reviews.

First Financial helps Americans get the cash they need at the most competitive rates. In the digital era, we set up and help you manage your cash advance, business loan or merchant services 100% online. We specialize in products for all kinds of borrowers, including those with fair and poor credit. We’ve done the work to find appropriate lenders that keep you solvent!

4 Ways High-Risk Merchants Can Cut EMV Chargebacks

Don’t let chargebacks sink your profits!

 Data breaches at Target, Facebook prompted the major U.S. credit issuers to insist on the EMV chip in October 2015. The move has made it much more difficult for fraudsters to create counterfeit cards, saving both companies and consumers money and headaches. According to Stephanie Erickson, vice president of risk products at Visa, the shift working: merchants are reporting less counterfeit fraud.

We applaud anything that reduces expenses to both businesses and their customers, but EMV has created another, although less costly, issue: chargebacks. Chargebacks occur when the card issuer holds the merchant liable for a payment transacted by a thief using a stolen or counterfeit card. Where once the banks absorbed much of these charges, today they are not so amenable. One payment network reported 250,000 merchants had experienced an 50% increase in chargebacks on card transactions. In effect, the banks, card processors and issuers are putting the burden of vetting for fraud on the merchants.

A few merchants aren’t accepting this responsibility. Claiming a lack of preparation time, they are now suing issuers. Networks counter that five years was plenty of time for even the smallest business to prepare for the increase in chargebacks they warned could follow the shift from magnetic stripe to EMV.

Merchants must know that if they have not yet switched to EMV terminals, they are liable for most of the chargebacks the banks had been absorbing. The top merchants affected have been gas stations, restaurants and quick service merchants like vending operations. It seems that large cities, college towns and border areas are the most likely to be the most tempting targets for thieves looking to take advantage of those who haven’t switched to EMV equipment yet. Smart criminals are avoiding the EMV terminals, another reason to get them into your stores. When a criminal successfully uses a magnetic stripe card at your business, you will get a chargeback and be liable for the purchase.

What can you do?

As mentioned above, Visa, Mastercard, and others have been adamant that merchants pay these charges. However, there are solutions that can limit the damage the EMV shift has brought to your high-risk business.

  • If you are not fighting chargebacks, start now. Won chargebacks do not count against your chargeback ratio. So, it means that a 75 percent win rate lowers your chargeback ratio by 300 percent. A better chargeback rate also helps you to keep your merchant account in good standing.
  • Fighting chargebacks can be a somewhat technical process. Consider getting an expert or service to fight these charges for you.
  • Lock down your eCommerce site or bricks-and-mortar business with front-end fraud prevention measures. These help identify the IP address of the customer by requiring them CVV and AVS. In this way, you filter most frauds and increase your chances in winning fraud disputes in chargebacks.
  • Use a chargeback alerts when you operate a service business. A chargeback alert is a type of alert that notifies you every time a customer initiates a chargeback. You have 24-72 hours to respond to it. If you are a service business such as technical support, you can always cut your losses by stopping your services whenever you get chargeback alerts.

 

Getting your merchant services streamlines is a great relief.

Most of All: Make the Shift to EMV Technology Today!

Magnetic strips on credit cards are just too easy for thieves to copy. Beyond this fact, credit card issuers now levy fees—often in the form of chargebacks—on merchants who do not use EMV technology. They want their customers to feel protected by offering the best, most secure, products. But this system doesn’t work if the merchants refuse to hold up their end.

When considering your options for taking credit cards, know that you’ll need a merchant services processor or merchant service account to safely process your transactions. A+ rated First Financial specializes in high-risk merchant accounts. Simply click here to apply and you’ll be able to start taking credit cards within 48 hours!

 

 


First Financial

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Merchant Services / High Risk Merchant Accounts: Main 1-800-950-0212  Fax: 1-800-215-0217

 

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