Being in the business world means that you’re categorized into certain groups as you grow from a small to established company. If you’ve been placed into the “high risk merchant” category, you want to know what that is and how it pertains to your future. Learn all about the high-risk merchant designation so that you can take control of your business prospects.
It’s a fact that the financial world is discriminatory when it comes to certain industries. They’re deemed as “high risk” regardless of your stellar background. These industries can include these areas, such as:
• Adult products
• Online-relationship fulfillment
• Bail bonds
You might have a legitimate business, but you’ll still need the help of high risk merchant services in order to conduct daily operations. The old adage of “spending money to make money” still applies. These merchant services allow you to charge consumers’ debit and credit cards as necessary.
Guarantor’s Credit History
Your company may also be a high-risk merchant if the guarantor has poor credit. Bankrupting a previous business or ignoring monthly bills are alarms for banks. They don’t see you as a responsible entity.
To prove the bank wrong, you need some credit to build up your new perspective on life. These options are possible through high risk merchant services. Show off your responsibility now so that future credit applications won’t be immediately earmarked as high-risk scenarios.
Another industry-specific reason why you’re categorized as a high-risk merchant is selling future deliverables. A good example of these sales are charges for hotel stays next year.
In essence, you’re charging a person a fee based on a promise to go on vacation. That buyer may pull out of the deal at some point, which forces you to return the money. Banks don’t look upon this practice as a solid way to make guaranteed money.
Did you overestimate your sales last year? Did you end up in the red? Financial problems for startup companies aren’t uncommon, but banks will hold it against you as financial overreach. They simply don’t want to take on the risk of losing money with your account.
The only way to pull yourself out of this problem area is by staying in the black all year long. In fact, you may need to prove several years of good numbers before you aren’t considered a high-risk merchant.
It’s hard to believe, but there’s a blacklist in the credit-card world. Referred to as TMF or MATCH, this list goes through Mastercard. Any company that’s had serious issues with credit will be recorded and advertised through this platform.
You’re officially a high-risk merchant at this point. Turning to high risk merchant services may be your only way to operate now. Access to charging credit and debit cards is crucial in any business today.
Working hard and making a name for yourself will help you move from the high-risk category. Go through the financial steps in order to solidify your stance in the industry. Your integrity shows through, which leads to easier financing and more options in the near future.