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How to Open A High Risk Merchant Account

Are you a high-risk business owner looking to securely accept in-store or online payments? Determining how to open a high-risk merchant account can be challenging, especially when you’ve struggled to get application approval from traditional banks and merchant services providers.


Fortunately, high-risk merchant accounts can provide peace of mind and help businesses like yours overcome the challenges of accepting high-risk payments.


In this blog from ModPay Solutions, our team of high-risk merchant specialists will:


  • Explain what precisely a high-risk merchant account is

  • Discuss the benefits associated with high-risk merchant accounts

  • Guide you through all the steps necessary to open a high-risk merchant account of your own

How to Open A High Risk Merchant Account

Table of Contents:


  1. What is a High-Risk Merchant Account Exactly?

  2. How Does a High-Risk Merchant Account Work?

  3. High-Risk Merchant Accounts: Understanding the Benefits Opening a High-Risk Merchant Account in 7 Steps

  4. Step 1: Identify Your Needs

  5. Step 2: Research Your Merchant Provider Options

  6. Step 3: Check Your Credit Score and History

  7. Step 4: Apply For An Account

  8. Step 5: Gather the Necessary Documents

  9. Step 6: Set Up An Account

  10. Step 7: Submit Your Application

  11. Conclusion


People Also Ask:


What is a high-risk merchant account?


A high-risk merchant account is a business account for companies with a higher risk of potential chargebacks and fraud. These accounts are necessary for high-risk businesses to accept credit and debit card payments.


How much does a high-risk merchant account cost?


The exact rate for a high-risk merchant account varies for each business and merchant provider. Typically, the average fee for high-risk merchant accounts ranges from $19 to $45 per month.

Early account termination fees also often range from $200 to $395, depending on the merchant provider and industry of the business.


What is a High-Risk Merchant Account Exactly?


A high-risk merchant account is set up for businesses that are considered too risky for traditional payment processors. This can include companies in specific industries such as firearms, gambling, and adult entertainment services. It can also include businesses with high sales volumes or those with previous chargebacks or fraud issues.


How Does a High-Risk Merchant Account Work?


A high-risk merchant account works just like any other merchant account; it allows businesses to accept customer credit card payments. The main difference between high-risk and regular merchant accounts is that they charge higher processing fees due to the increased risk associated with certain transactions.


For example, suppose you are selling products or services online that are considered "high risk" by banks and credit card companies (such as firearms, pharmaceuticals, gambling, or adult entertainment). Your business will likely be classified as "high risk" and subject to higher processing fees than those charged for regular merchant accounts.


High-Risk Merchant Accounts: Understanding the Benefits


Having a high-risk merchant account offers several benefits for business owners and entrepreneurs in high-risk industries:


  • More opportunities for long-term growth

  • Higher chances for increased profits

  • Ability to accept multiple forms of payment

  • Stronger chargeback protection

  • Reserve account options for unexpected chargebacks

  • Ability to process credit card payments even with financial setbacks or bad credit

  • Increased customer and business information security

Opening a High-Risk Merchant Account in 7 Steps


Opening a high-risk merchant account can seem overwhelming, but it doesn't have to be. Our team at ModPay Solutions has put together this seven-step guide to help you navigate the process.


Step 1: Identify Your Needs


The first step in opening a high-risk merchant account is determining your needs. This includes understanding what services you'll need from a merchant provider and what type of customers you will be servicing.


Do you need to accept payments from multiple currencies? Will you be offering subscription-based services? Knowing what services you need will help narrow down which payment processors offer the best solutions for your business.


Step 2: Research Your Merchant Provider Options


Once you know what services your business needs, it's time to start researching potential providers. You'll want to look at their terms and conditions, fees, customer service ratings, and more.


Check reviews from other customers who have used their services before signing on with any given provider. The more research you do upfront, the better off you'll be in the long run.


Step 3: Check Your Credit Score and History


Before applying for a high-risk merchant account, take some time to check your credit score and history. This is important because many payment processors require good credit as part of their high-risk accounts' eligibility criteria.


If any negative marks on your credit report could affect your ability to get approved for an account, make sure to address them as quickly as possible before submitting your application.

Step 4: Apply For An Account


Once you've identified your needs and researched potential providers, it's time to apply for an account. Most merchant providers offer online applications to provide a quicker and more straightforward process.


Just make sure to get all the details and required paperwork! After submitting your application, it typically takes five days and two weeks to hear back about approval or denial of the account.


Step 5: Gather the Necessary Documents


Your provider may require additional documents before you approve your merchant account application. Commonly requested documents include proof of identity (such as government-issued IDs), proof of address (such as utility bills or bank statements), and bank statements or other financial records showing evidence of income or other sources of funds used for transactions processed through the merchant account.


Step 6: Set Up An Account


After receiving approval of your application, it's time to set up an account with the chosen provider. Depending on the provider selected, this may include setting up automated billing options or integrating secure checkout processes into websites or online stores.


Be sure to ask questions along the way if anything seems confusing — after all, setting up a successful high-risk merchant account is vital for keeping transactions safe while allowing customers access to convenient payment options!


Step 7: Submit Your Application


Once you have collected all the necessary documentation, submit your application for review by your chosen merchant provider. The application process time frame depends on how quickly the provider can review and approve your application materials.


Once approved, you will receive confirmation from the provider and be ready to start using their services to process customer payments.


Conclusion


Opening a high-risk merchant account is essential for business owners who want access to more reliable payment processing options, protection from chargebacks, and better customer service.


With the right provider, setting up this type of merchant account can be more streamlined and hassle-free. Don't let the fear of being labeled "high-risk" stop you from taking advantage of its many benefits!


Would you like to discover more about high-risk merchant accounts?


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