The best high risk merchant accounts are those that offer the most security and protection for your business, while also being easy to use. In this article we break down the basics of payment processing, the difference between high risk and low risk merchants and how to find the best payment solutions for your high risk business in 2022 and beyond.
High Risk Merchants: What Are They & How Do You Find Them?
A high risk merchant is a person or company who has been flagged by a payment processor as having an unusually large number of chargebacks. The reason you might want to check with a high risk merchant service provider (HRMS) is because they can help prevent fraudulent charges on your card.
What Is A Chargeback?
A chargeback occurs when a customer disputes a transaction and demands their money back from the merchant. This usually happens after they’ve already made a purchase. If the merchant doesn’t get paid back within 30 days the credit card issuer will automatically reverse the transaction and refund the amount of the disputed item to the original purchaser.
Chargebacks are considered frauds by merchants, so it’s important that every transaction processed through their system be properly vetted before being accepted for processing.
High Risk Categories
There are several categories of merchants that fall into the high risk category. These are listed below.
Electronics: Electronics related devices such as cell phones, tablets, laptops, gaming systems, smart watches, headphones, etc. are all vulnerable to fraud.
Restaurants: Restaurants offer convenient access to food and drinks. Unfortunately, restaurants sometimes allow employees or customers to use stolen credit cards at the point of sale.
Travel: Travel agencies such as airlines, hotels, cruise lines, etc. are particularly susceptible to fraud during travel.
Malls: Malls are especially vulnerable to fraud due to their large size and convenience. Thieves target shoppers who use cash and debit cards while shopping.
Bars & Clubs: Bars and nightclubs have similar issues to malls. They are both very easy targets for pickpockets and thieves.
Gambling: Gambling is another area that can be fraught with trouble. Gamblers frequently carry around large amounts of cash, making them a prime target for criminals.
Online Shopping / Ecommerce: Online shopping is becoming increasingly popular, but there are still risks associated with online transactions. Credit card numbers can be stolen and sold over the Internet. It’s best to shop only from reputable websites like Amazon, eBay, Walmart, Target, Best Buy, etc.
Now that you know some high risk industries let us explain how to find a high risk merchant that will work with your business.
How To Identify A Potential High Risk Merchant
The first thing you need to do is find out if your business is classified as a high risk merchant. Most processors base high risk merchants based on the classification of your business criteria. If you are classified as a high risk business cashless ATM systems are your next best option. Hope this article helps you find a high risk payment processor for your business.