Offering your customers the option to pay via credit or debit card can be a crucial step for your business. Especially when it comes to doing business online, as paying with a debit or credit card is the only option a customer has. Many third party payments providers will offer credit card processing as part of their merchant processing services, but there can be a catch.
While these services are readily available to lower risk businesses, businesses with higher risks – or a managed risk model – can find it difficult to get the support they need to open a merchant account. This is due to the fact managed risk merchant services are only offered by specialized service providers, like Payscout.
Since Payscout has such a long history of partnering and supporting higher risk businesses, we thought it would be helpful to provide answers to some of the most common questions you may have about managed risk payment services.
Is your business type considered managed risk?
As a general rule, you will qualify as a managed risk merchant if your business type is classified within the financial industry as having a “higher level of managed risk.” This means you either serve an unpredictable clientele or accept only online transactions where the actual card and cardholder are not present to authorize. It could also mean your transaction turnover is high with large volumes of sales. These factors tend to lead to enhanced risk for card fraud, which is what the providers are looking for when they evaluate eligibility. Small companies with low volume sales can also be considered managed risk businesses, because they typically can’t afford to make an investment in fraud screening tools, like the larger companies can.
It is not just the type of industry or size that can cause a business to be defined as managed risk. The individual owner’s reputation is equally as important when determining risk status. Business owners with poor/inconsistent credit histories, or those that have been blacklisted, are considered to be a higher risk than those with good standings.
Does your merchant services provider want you to provide a rolling reserve?
Most service providers will want a reserve of some kind to protect their interest, so keep that in mind. Make sure you understand the terms of your contract and it is important to feel confident about your relationship with whatever merchant services provider you choose. They will play a large role in the success of your business.
What should I look for in a managed risk merchant services partner?
Merchants with managed risk models often have to search a little more to find a merchant provider that will board them as an account and also provide them with the excellent service they deserve. For this reason, the process of finding the right managed risk merchant services provider is important. The right merchant services provider can make or break your business down the road, so looking for a provider that is the best fit for you is worth the time.
Also, since managed risk merchant services fees are typically higher than those charged for low-risk businesses, it’s important to review proposed contracts and rates carefully. Some merchant service providers can take fees to an extreme, charging extra to set-up accounts on top of standard processing fees.
Moreover, it can be difficult for managed risk merchants to negotiate the terms of their credit card processing, due to the fact they have less leveraging power. However, the pros of enabling debit and credit card payments for your business will generally outweigh all the cons, so we encourage you to keep looking until you find a provider you feel comfortable with. Just remember to thoroughly read your contract and keep an eye out for extras like termination fees or other incidentals.
When choosing a managed risk merchant services provider, there are many things you can do to ensure you find the right partner:
- Ask around and choose a provider with a well established reputation in the field and one that is well spoken of for the range and quality of services offered.
- Choose someone who caters to your specific needs. For instance, depending on the nature of your business, you may require 24×7 customer service support.
- Insist on a breakdown of the fee structure. Don’t sign-up unless you are convinced the fee structure is fair and clear.
Below, we’ve listed a few of the managed risk business types Payscout supports:
- Pharmaceutical products
- Travel services
- Telemarketing businesses
- E-wallet and E-cash
- ISP and hosting services
- Online cigarette or tobacco vending
- Online auctions and debt services
- Online dating services
- Online sale of replica products
Setting up a managed risk merchant account can be overwhelming. Payscout has a team of managed risk specialists standing by to talk to you about your unique business needs and help you find the perfect blend of services and price. Give us a call at 888-689-6088 or inquire online today!