What’s Next if Your Bank Deems Your Business High-Risk?

Tuesday, January 25th, 2022

If your merchant account provider deems you high-risk, it may not be the end of the world, especially if you have a good payment history. But it’s time to get serious about improving your business practices or finding another provider.

First, your next best chance is with a high-risk merchant account provider. But before you start searching, it’s essential to understand what you’re up for.

What is a High-risk Merchant Account? What are the Downsides?

A high-risk merchant account is given to businesses that are considered to be a higher risk than others. These are generally businesses that sell niche products or services, particularly those that fall outside the mainstream.

Some of its downsides include:

• Limited payment options – High-risk merchant accounts are often limited to just Visa/MasterCard or Discover. You may also find restrictions on accepted cards from particular issuing banks.
• Higher fees – The additional risk associated with high-risk merchant accounts means higher fees, and this can make it difficult to offer competitive pricing for your products and services.
• Restrictions on daily withdrawal amounts – High-risk merchant accounts often limit how much money you can withdraw in 24 hours. If working with a ticketing agency, for example, those limits can make it difficult to access funds in good time.

Lastly, you also need a merchant account reserve–this is an amount your payment processor reserves as security.

What to Do if You’re Deemed High-Risk

Here are some steps you can take:

Find out why you’re high-risk. 

Your provider is required by law to send your business a written notice explaining why and what to do to solve the problem. 

Read this letter carefully and make sure you understand it completely. You have up to 60 days to address the “high-risk” issue or request an extension. But after that, your account is likely to be closed.

Get help from competent High-risk service providers

If you’ve been doing business online, chances are someone has tried to sell you a service or product that claimed it could help your business. 

Chances are also good that those products didn’t really deliver what they promised, and they were too good to be true anyway. 

So what’s the catch?

With high-risk accounts, it’s best to work with a provider who understands your industry and has your business’s best interest at heart.