Accepting credit cards at your business can mean the difference between stagnant sales and the ability to grow. But if your business falls into the high-risk category, finding a payment processing company becomes very difficult. Let’s look at high-risk businesses and the options available for credit card customers.

Defining High-Risk

High-risk businesses include companies with a lot of chargebacks, new businesses with little credit history and high dollar transactions, or international merchants doing business with third-world or hostile countries. Also, a poor personal credit history puts you in the high-risk category.

The following industries fall into the high-risk category.

  • Online gambling or casinos
  • Pharmaceuticals or drug stores
  • Adult entertainment
  • Debt collection agencies
  • Fantasy sports websites
  • Travel agencies
  • Dating services
  • Magazine subscriptions
  • eCommerce sites

According to statistics, the above businesses receive more fraudulent transactions than others, increasing the risk of chargebacks. Payment processing companies want limited exposure to fraud, so they shy away from certain industries.

Risk Factors

Banks and merchant account providers judge risk based on chargebacks. A chargeback occurs when a customer cancels a transaction, when charges are refunded, and when credit card fraud occurs. Plus, paying bills late or having no loan collateral are high-risk practices. too. If your personal or company credit is bad, the consequences include paying higher transaction processing fees or having the payment processor cancel your account.

The Importance of Credit Cards


Image via Flickr by frankieleon

Yet businesses need credit card customers. If you limit yourself to cash and physical checks, your sales area shrinks to mostly local customers. Society depends less on cash than ever before. Accepting credit and debit cards and other electronic transactions expand your market and help customers needing optional payment methods.

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Your High-Risk Choices

So, what choice do high-risk businesses have? Merchant account providers charge much higher fees for high-risk industries. Some providers won’t take a high-risk client at all. But don’t despair. Payment processing companies like High Risk Pay specialize in these clients. If your business has a high chargeback rate, conducts a lot of international business with third-world nations, or has a history of late payments, a high-risk payment processor offers you an alternative.

Reducing Your Risk

Since chargebacks are the top reason businesses fall into the high-risk group, taking steps to prevent these transactions helps lower your risk. Make sure your payment processor alerts you if a customer files a dispute against you. Most cardholders never contact the merchant before disputing the charges.

Let your payment processor offer ideas to prevent fraud and save you time and money fighting chargebacks and identity thefts. The automated software used by card processing systems flags fraud-prone accounts. Plus, an early alert helps you intercept the fulfillment of disputed purchases. If you do get a chargeback, the processing company can help you defend your case. In addition, up to a third of credit rejects are actually good. The software also detects these errors, giving you time for recovering the sale and the customer.

Accepting credit cards helps your business expand. If you’re in a high-risk industry, don’t fret. There are solutions available.