Is the Best High Risk Merchant Account always about lowest fees?

 

When seeking the best high risk merchant account, business owners tend to gravitate towards the most inexpensive option. It makes intuitive sense: high risk processing already costs more than standard accounts, so having fees as low as possible would make sense. But opting for the lowest price alone is an expensive mistake that ends up discrediting your entire business operations.

The True Cost of Cheap Processing

The cheapest high risk merchant account typically has sneaky tradeoffs that don't manifest themselves until you have already enrolled. Low publicized rates are sometimes offset by runaway chargeback fees, monthly fees, PCI compliance charges, or early termination charges buried in the contract. A few processors entice clients with rock bottom transaction rates and then nickel-and-dime them with charges for basic services like batch settlements, customer support, or gateway access.

Worse still is the risk of having to work with undercapitalized or unscrupulous processors. Budget providers may not be financially healthy enough to weather high volumes of transactions or withstand industry coercion. When these companies fold or lose bank relationships, merchants face surprise account closure, frozen funds, and running around to find alternate processing—possibly losing weeks of revenue in the process.

What Really Matters in High Risk Processing

Stability and Longevity: Your processor's history is a big factor. Banks with long-standing business relationships and several years' history operating in high-risk businesses are far less likely to close your account or make sudden changes to terms. This level of stability is worth paying for, especially when your entire revenue stream depends on uninterrupted payment processing.

Chargeback Management: There are higher rates of dispute among high-risk merchants, so sound chargeback prevention and management solutions are a requirement. Leading vendors offer real-time fraud filtering, rules engines that can be customized to your business, full reporting, and support on a one-on-one basis for fighting chargebacks by fraudsters. These alone will save you many more dollars than you would be offered through partially lower transaction charges.

Underwriting Knowledge: Processors dedicated to your specific line of business have knowledge of its own industry issues and regulatory compliance requirements. Trinity Consultings better able to establish accounts properly, advise regarding compliance issues, and speak for your account when banking partners complain. Off-the-shelf high risk processors handling all industries the same way tend to create problems later on.

Payment Flexibility: Modern businesses are now required to take various modes of payment—credit cards, ACH payments, digital wallets, and foreign payments. The cheapest processor will only take plain card transactions, and you're left cobbling together several solutions. A complete platform, while most probably more expensive, brings better business efficiency and customer experience.

Reserve Requirements and Fund Holds: How a processor handles reserves can have a gigantic effect on cash flow. Some require substantial upfront reserves or have stringent rolling reserves that tie up working capital for extended periods. Others offer more acceptable reserve terms based on actual risk assessment. The effect on available cash can overshadow any benefit from reduced processing rates.

Customer Support Quality: When there are processing issues—and there will be—responsive, educated support is priceless. Budget processors provide minimal support, leaving merchants at the mercy of it when there are key payment failures or technical issues. Premium providers generally include dedicated account managers, 24/7 technical support, and proactive monitoring.

Finding the Right Balance

The ideal best high risk merchant account finds a balance between competitive rates and complete service. Start by locating providers that serve your industry, and check their stability, technology, and support infrastructure next. Request transparent pricing that discloses all charges, not just attention-grabbing rates. Check what others in your line of business are saying about them, especially for feedback on account stability and dispute resolution.

Consider the total cost of ownership, not merely transaction fees. A 0.5% more expensive account that offers improved chargeback protection, uptime, and support will be more lucrative in the long run than the cheapest one without these basics.

High risk processing is too critical to the success of your company to be considered a commodity purchase. Lowest fees are meaningless if your account is frozen, your money is held hostage forever, or your processor goes belly-up.