If you’re a business owner or an individual looking to accept credit cards for payment, you’ve probably been told you need to have high risk merchant accounts. High-risk accounts are not born without obstacles though. That’s where the help comes in: Getting the right credit card processors, banks and big name companies have grown wary of the increased risk that some merchants and small businesses bring with them.
With all the high risk accounts that have been closed or downgraded over the past year, it can be difficult to find the right processors to help you accept credit cards. The problem with many processors is that they’re only designed for handling certain cards. These cards are usually from large corporate issuers like Visa and MasterCard, or from major retail brands like Best Buy and Wal-Mart. The good news is that there are still options available to small businesses, but they may take a little time and effort to find the right processor for your business.
If you’re looking to start a business or expand an existing one, you may want to look into the types of merchant accounts available. Some processors offer both secured and unsecured merchant accounts. Secured accounts require a business to put up collateral in order to obtain a card, and this can be an expensive solution. Unsecured accounts allow you to open a merchant account without putting up any collateral, which is often more affordable. However, if the account gets closed by the bank or other financial institution that issued the card, you’ll have to pay the loss out of pocket. Because these accounts aren’t secured, you should check to make sure your business will be able to pay for the losses on them if they close. You should also check to make sure you can still keep the business if you don’t get your accounts.
Credit card processors that offer unsecured merchant accounts will charge a higher rate than a bank. There are two reasons why. First, they don’t have as much collateral tied up in them, and so the costs of closing them out of their systems are less expensive. Second, the risks involved with accepting a credit card can be much greater. If you do a poor job or are caught doing something illegal, the bank can sue you. for any money lost by refusing to close out a bad account and the fines and fees associated with it. Learn more information about high risk processing.
As mentioned above, you should also think about the types of transactions that a credit or debit card requires when choosing a credit or debit cards merchant account. If you only accept cash payments, you should check to make sure the processor that you select has the capability to do that. There may be an issue with your processor if it isn’t up to speed on how to process that payment.
Another thing to consider when deciding on which type of merchant account to have is the fees and rates for that account. Many credit card processors will charge you for opening and maintaining a card. They may charge extra fees for any card you already have if you don’t close the accounts before you cancel them. There may also be annual fees if you sign up for a new card or set up a new credit limit for a particular account.