Article provided by: JJS Global, Inc.
Pros Of High Risk Credit Card Processing
High risk credit card processors specialize in processing funds for high risk merchants. High risk merchants are businesses exposed to a high amount of chargebacks. A chargeback is a situation where a consumer disputes a charge and request for the money they had initially paid.
Traditional card processors will not associate with businesses perceived as high risk or belong to a high risk niche. There are several factors that account for the categorization of a business as high risk and increase their proclivity to chargeback, these include the product or services the merchant renders, the method of processing transactions, the location of sales etc.
A high risk merchant will be required to open a high risk merchant account with an acquiring bank and utilize the services of a high risk credit card processor.
On a peripheral glance, it seems like a bad thing to be considered a high risk merchant limited to dealing only with high risk payment processors. But there a couple of pros of opening a high risk merchant account and utilizing a high risk credit card processor.
1) Global expansion:
Low risk merchant accounts have several limitations, one of which is its inability to sell to countries outside US, Canada, Japan, Australia and a couple of countries in Europe. Whereas a high risk merchant account allows businesses to sell to anyone, anywhere at any time. This gives businesses the opportunity of global expansion.
Aside from being able to sell to anyone anywhere, high risk credit card processing allows high risk merchants to accept multiple currencies. The combined benefit of being able to sell to anyone anywhere and to accept multiple currencies increases revenue opportunities tremendously.
2) Limitless earning potential:
Other limitations associated with low risk merchant accounts are; monthly revenue cap of $20,000, they do not accept recurring payment and they do not accept credit card transaction of over $500 each.
But with high risk card processing, there is no limit to what a merchant can earn monthly. They can earn as much as their capacity to sell, while also being able to accept recurring payments.
Recurring payments and installment billing are one of the major avenues of steady revenues for online businesses.
3) Sell whatever they like:
There are certain business niches that credit card processors consider as high risk. Any business that deals in any of this niche are considered a high risk business. Some of these include; travel related services, adult products, betting services, cigar stores, drug stores and pharmacies.
These business niches are huge revenue earners but a low risk account would not be able to sell these products or offer their services. Whereas a high risk merchant account allows businesses to sell anything they wish to sell.
4) Safe checkbacks:
One of the cons of high risk card processing is the high checkback fee. Low risk merchants benefit from a lower checkback fee. But in the long run, the high risk merchant benefits more. Banks regularly check merchant accounts for checkbacks. If the checkback-to-transaction ratio of low risk merchant is excessive, the bank may have to terminate the account. But if it were a high risk merchant account, there is no such termination, the fees may climb higher, but the longevity of the business is guaranteed.
Credit Card High Risk
View Larger Map