Have you ever wondered what goes on behind the scenes when you swipe your credit card for a purchase? For most of us, the process is seamless and hassle-free. However, for certain businesses operating in industries considered to be high risk, credit card processing can be quite a different story.
Understanding high risk credit card processing.
High risk credit card processing refers to the payment processing for businesses operating in industries that are deemed to have a higher likelihood of fraudulent activity, legal complications, or financial instability. It is worth noting that being classified as high risk does not necessarily imply that a business is doing anything wrong or illegal. Rather, it often involves external factors beyond the control of the company.
Industries that typically fall into the high risk category include online gambling, adult entertainment, e-cigarettes, nutraceuticals, and travel agencies, among others. These businesses face additional challenges when it comes to accepting credit card payments, primarily due to the inherent risks associated with their operations.
Common problems faced by companies with high risk credit card processing.
Strict regulations.
High risk industries often have to comply with complex regulations and guidelines imposed by credit card networks and regulatory bodies. For instance, online gambling businesses must navigate a myriad of legal requirements and licensing procedures to operate legally in various jurisdictions. Failure to comply with these regulations can result in hefty fines or even the suspension of credit card processing capabilities.
Higher chargeback rates.
Chargebacks occur when a customer disputes a charge and it is reversed. High risk businesses generally experience higher chargeback rates due to factors such as dissatisfaction with services, fraudulent activity, or misunderstanding of terms and conditions. Excessive chargebacks can severely impact a company's ability to continue accepting credit card payments.
Limited options for processors.
Banks and payment processors are often cautious about working with high risk businesses due to the potential for financial losses and legal repercussions. This limited pool of available processors often results in higher fees, longer settlement periods, and stricter terms and conditions for high risk merchants.
Higher processing fees.
Due to the increased risk associated with high risk credit card processing, payment processors often charge higher fees to compensate for potential losses. This can significantly impact the profit margins of business owners within these industries.
Difficulty in obtaining merchant accounts.
Merchant accounts are essential for businesses to accept credit card payments. However, high risk businesses often encounter difficulties in obtaining these accounts. Banks and processors may be reluctant to take on the risk associated with certain industries, making it challenging for businesses to find suitable solutions.
A quick summary.
In conclusion, high risk credit card processing presents unique challenges for businesses operating in industries deemed to have a higher likelihood of fraudulent activity, legal complications, or financial instability. It is important to be aware of the potential problems faced by high risk businesses and partner with a reliable payment processing provider that specializes in this area.
Do you need help with your credit card processing?
If you operate in a high risk industry and have come across these problems trying to process credit cards, then you need to contact the team at SlidePay. We offer superior merchant services that cover all payment needs, including high risk transactions. Our software and hardware options are fully adaptable to provide you with a cost saving solution that best fits your business. They are easy to set up, accept all major credit cards, and give you full 24/7 merchant support with low processing fees and quick approval.
