What businesses are considered high risk?
How do you know if your company is high-risk and why you should worry about that?
We would like to reassure you and say that high-risk enterprises have the same capabilities and zero restrictions, but it’s not true.
It is much harder for organizations working in high-risk areas to conclude cooperation agreements with new business partners. Even if they do manage to find a company that will process their transactions, they will have to spend a lot of money paying higher service fees.
True, there is one exception. We will talk about it at the end of this article.
Why does nobody want to cooperate with high-risk companies?
Companies, whose main field of activity is payment processing, really do not want to work with high-risk companies, first of all, because of potentially high losses. Firstly, high-risk companies are more likely to fail. Secondly, it harms their reputation. How other firms will look at a company that processes payments from a firearms dealer or casino, whose reputation is not exactly ideal.
If we look at a company that sells electronic cigarettes, the frequent reason for not cooperating with it is the huge number of refunds.
It is important to understand, that the more risky a company is, the greater will be risks of the payment institution, which will process their payments. Accordingly, it will have to pay much higher commissions. And it is far from a fact that any company will want to cooperate with it.
Why do credit card processors care about risk?
Payment institution specializing in processing online payments is directly responsible for all the transactions. Fraud and a lot of chargebacks are the last things the processor will want to deal with. All of this not only leads to large expenses on payment processing but also increases the financial risks of the processor itself, not to mention the direct threat to its reputation.
Which companies are classified as high-risk?
High-risk companies are companies whose activities related to the following industries:
- Anything adult-oriented
- Financial services
Your company may be considered to be a high risk for the following reasons:
- The number of refundable payments exceeded all admissible norms
- Your international business covers countries with a high risk of chargebacks (outside Australia, USA, Canada, Singapore, South Korea).
- Your company started its business recently and the history of its credit card processing is too insignificant
- You are a multicurrency company
- During your work you have managed to significantly undermine your credit history.
How can I improve my chances of finding a credit card processor?
So, your company is recognized as highly risky. However, it does not mean that no credit card processor will want to do business with you. What’s more, you may even agree on more loyal terms of cooperation if you follow these guidelines:
- No tricks or deceptions. You should not provide false information or try to hide the goods and services you sell. When the truth comes out (it will happen for sure), no one will want to cooperate with you.
- Demonstrate your assets and earnings. The financial stability of your company is very important for any payment processing provider. Demonstrate not only your high income but also all the resources you have – equipment, inventory, buildings, and so on. If you have manufacturing assets, processors are more likely to provide you with payment processing services. After all, it will indicate that your funding is sufficient to cover possible losses.
- Show the payment processing history. It will allow you to see how you have processed payments in the past. Even if the previous processor refused to cooperate with you, it could happen only because your business was too risky for the company, not because of possible fraud or chargebacks.
Besides, payment institutions could better consider established projects, which mean more forecasted risk level.
An exception to the rules
As we mentioned before, it is challenging for high-risk companies to find business partners. Especially it concerns companies that process payments.
There is no need to worry. Even if your company operates in a high-risk industry, you can always trust your online payments to PayOp.
- We provide the easiest, fastest, and most profitable way to accept and receive payments. You can access more than 350 payment methods and more than 10 ways to withdraw money.
- Fast verification of projects
- Affordable cost of services for your company
- Multicurrency. Currency conversion is performed in real-time
- The highest level of security PCI DSS L1
- Tokenization of payment cards in 1 click
Moreover, we offer services to companies operating in high-risk industries. Contact us right now and get the best prices for our services!