When applying for a merchant account with your bank, you may have been surprised to learn that you are not eligible for a normal merchant account and instead, you will have to have a high risk merchant account. If you already have a merchant account with your bank, you may receive communications form them that your current merchant account for your gardening business has been changed to a high risk merchant account.
These can be worrying things for business owners who don’t entirely understand what this means. A high risk merchant account is for businesses that are deemed to be high risk by the bank. They may be classified as high risk due to the business owner being relatively inexperienced when it comes to their sector, or perhaps your business has had a large amount of credit card chargebacks over a certain period of time, which will be judged in a negative manner by the bank.
In order to make up for any risks or charges associated with chargebacks, the banks will raise the processing fees on any credit card transactions.
There are many additional reasons why your business may have to have a high risk merchant account. There are certain high risk solutions available to you, once you conduct the necessary research.
Why has your business been identified as being high risk?
There are many different reasons as to why your business has been identified by your bank as being high risk. One of the most common factors is that you or your business has a poor credit score. If you do not have a good history with credit, the risk of you defaulting and not paying pack your debts are far greater.
Many businesses that are new and have owners who are not greatly experienced in the gardening business, will be more likely to be high risk as there is a greater chance of them going out of business or only struggling to get by.
Banks these days are not in the business of taking a lot of risks, they are more concerned with having proper lending practices. After the recent recession, many of the banks have learnt their lesson from taking excessive risks, as well as their regulators clamping down on risky activity more and more.
Even if you are experienced and have a good credit score, if you are dealing with suppliers of your gardening goods that are located offshore, there are many additional risks that go with these activities, so there is more of a chance of being classified as being high risk.
There are ways in which you can counteract these offshore risks. Many banks will have specialised departments and merchant accounts that can be used to deal with offshore suppliers without having increased or high risk processing fees. It is well worthwhile seeing if your bank provides these services. If they do not, it may be worth your while looking for a bank that does.
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