Determining if your Business is a High Risk
Some companies that use credit card merchant services are considered higher risk than others. These factors usually depend on the type of services and products they offer. New companies, for example, could yield a greater risk than older companies because no line of credit has been established. Also, the type of business you have could also be a factor in your risk. If you operate an online gambling service, you might have a higher risk than let’s say a baby clothing boutique. Businesses where higher rates of dissatisfaction among customers are also more likely to happen are considered higher risk. Lastly, if you have a high percentage of chargebacks, you could also be considered a higher risk.
There few factors: your credit history, industry, the length of time you have been in business and your chargeback history are all items you should typically consider when trying to determine your risk rate to credit card processing companies.
A credible and qualified ecommerce merchant account knows how to handle any type of situation and you should be able to rely on them to point you in the right direction.
With technological advancements today and the use of online processing rising daily, credit card processing providers are also concerned with credit card fraud and will consider your possibility of fraud when determining your rate. Credit card fraud occurs when cards are stolen and used by another party other than the card holder. Many fraudulent transactions generally occur online because of the ease of purchase without necessary identification. Companies with such customer service satisfaction policies as money-back guarantees can also be considered high-risk because they may have a heavy volume of chargeback transactions. If you are operating an Internet company or conduct a large amount of ecommerce processing, a good online merchant account agency can help you put deterrents on place for this type of activity.
If you find that your company falls under the high-risk category, your fees will be higher and you can anticipate a reserve of some sort with your credit card processing provider.
