Is your Business High Credit Risk
There are some types of businesses that are riskier than others, depending on your credit history and the type of your business. If there is a high potential for fraud among the clientele you serve (think online adult sites), then your business is considered higher risk than, for example, a clothing boutique. A sound Internet credit card processing company will know how to handle this type of situation. Additionally, if your type of business has a high rate of dissatisfaction among your customers, then you also are considered high risk. Companies also will look at the length of time you have been in business as well as your chargeback history. If you have a low percentage of chargebacks and have been in business for some time, they will assume you know what to look for in terms of fraud.
Credit card fraud is the highest type of risk and occurs when cards are stolen and used – which occurs in a great deal of credit card online processing. Additionally, companies that rely heavily on customer satisfaction, such as those that offer a money-back guarantee, also are considered high risk because they have a heavy volume of chargebacks, which is exactly what your merchant account provider does not want. Again, particularly for Internet companies and those that have an ecommerce merchant account, a good Internet credit card processing agency can help you put deterrents in place for this kind of activity.
In these instances, your fees may be higher and you may be expected to build up a reserve of some sort with the specific company you’ve hired to do your credit card processing. The amount required to have in your reserve may vary, but it is the price you will have to pay to offer credit card processing.