Tips To Get The Best Rate For High Risk Merchant Accounts

High risk merchant accounts are typically associated with higher than normal processing fees but that is not the case always. Credit card processing fees are a huge expense for many businesses especially when thousands of transactions are done each month. By lowering the processing fees, you can save quite a bit of money which adds to your overall profit margin. So, follow the tips mentioned below in order to get the best processing rates for high risk merchant accounts.

Sign up with a Specialty Merchant Account Provider

While there are several high-risk merchant account providers, you need to understand that high risk merchant account providers also specialize in various industries. You are more likely to get the best rate if you sign up with an account provider specializing in your industry. They understand your business which means they should be able to offer better rates as compared to others.

Pay Only for What You Need

One of the most common mistakes made by businesses is that they sign up for so many products when pushed by the merchant account provider even when they do not need those products. So, the best way to keep your processing costs down is to only opt for products that you are really going to need for running your business. On the other hand, it’s better to have some extra services in case the increased profits from extra sales make it worth your while.

You will need to decide whether you need a credit card terminal. It’s a must if you’re running a brick and mortar business as most customers prefer paying through credit card instead of cash. On the other hand, you will need to invest in a mobile payment solution in case your business is always on the go.

A POS system allows you to integrate your online management program and your in-store system. If you plan to sell products online, you will need to use a secure e-commerce payment gateway that can be integrated with your chosen shopping cart. In simple terms, choose carefully and make sure you have everything you need to run your business. Don’t sign up for extra bells and whistles.

Buy the Equipment

The best way to keep your costs down in the long run is to buy your own credit card processing equipment. Many providers offer lease agreements that are designed to tie businesses into 48 month contracts and these contracts come with severe cancellation fees. Even if you do not use their equipment, you will have to continue to pay for the hardware until the contract ends. So, take into account the cost of buying the equipment and compare that with the lease fee before deciding.

Month to Month Contract

Most merchant account high risk providers offer the standard three-year contract and these contracts typically come with huge early termination fees. You should shop around and try to sign up with a provider that offers a month-to-month contract. It may be challenging but there are providers that can offer you month-to-month contract.

More Security Information from Customers

In the high risk merchant account industry, most businesses do not process credit cards in person, and products and services are typically sold over the phone or Internet. This increases the risk for merchant account providers which results in higher fees for merchants.

You can reduce the risk by asking your customers to provide additional information when processing their orders. For instance, you can ask your customers to provide their phone number, ZIP Code and other such things that can reduce your risk. Keep in mind that when you make it hard for scammers to defraud your business, you also lower the risk associated with your business which can help you negotiate for lower fees with your merchant account provider.

Have Clear Shopping Timelines And Refund Policy

One of the most common mistakes made by businesses while selling online is that they do not define shipping timelines clearly and it makes customer nervous. This nervousness may result in refunds and chargebacks that may lead to higher card processing fees for your business. Similarly, having an easy to understand refund and return policy reduces the risk of chargebacks.

In simple terms, the key to lowering your merchant account fees is to keep your chargebacks below 3% of the monthly revenue. It will put you in a stronger position to negotiate lower fees with your provider.

Track Record

In most cases, your merchant account provider will have a preset monthly limit. It is important that you do not exceed this estimated monthly limit. Once you are able to maintain the level of chargebacks and monthly transactions to predetermined levels, you can negotiate with your current processor to waive or lower certain fees.

You will have to prove to the processor that your business is stable and predictable which means your business is low risk than initially anticipated by the processor. Lower risk usually results in lower processing costs.

Read the Fine Print

Before you sign up, carefully go through the contract the merchant account provider has drawn up for you. Make sure you understand every single thing mentioned in the contract including termination fees, restrictions and limitations and other such things. Most processors will try to lock you into a contract for a period of 36 months to 48 months. You should avoid signing up for such a long contract period and you should sign up only if you are unable to find a processor that offers month to month contract. Simply put, make sure you are aware of all the fees you will have to pay including the monthly fees and yearly fees as well as any other kind of fees before signing up.

You should shop around and compare the rates given by various processors in order to choose the best one for your business. While choosing a processor, do not pay attention to only the processing fees but also their reputation and customer service.

Overall, a business that is deemed high-risk by a merchant account provider is not essentially a bad thing. Labeling a business high-risk only means that the merchant account provider considers a business to be riskier as compared to other businesses, but you can lower that risk by following the above mentioned tips.

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