Credit Card Processing

High Risk Credit Card Processing

August 23, 2022

High Risk Credit Card Processing

There are an estimated 29.31 billion credit cardholders across the globe. And because of the perks and convenience of paying with a credit card, more and more people prefer using a shiny piece of plastic for every transaction. So, we arrive at the question — does your business allow it?

Of course, there are more ways to pay than just a credit card. But buyers are often very staunch when it comes to their payment preferences. So you might be losing patronage by failing to provide the most preferred method. That’s why it’s no question whether credit card payments should be an option in your stores. Fortunately, everyone can get credit card processing services these days — even high-risk businesses.

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What is High-Risk Credit Card Processing?

The process is simple for buyers — they swipe their card or key in their card details, wait a few seconds for their payment to push through, and voila! The transaction is complete, and they can get their product. But for businesses, banks, and payment processors, a lot happens during those few seconds.

High-risk credit card processing involves various payment networks, regulatory bodies, and financial institutions that work together to send payments from buyers to businesses quickly, efficiently, and above all, safely. Most of the time, high-risk merchant accounts and credit card processing are offered as a bundle deal.

These services are available to any business that wants to stay relevant in today’s cutthroat commercial market. However, for high-risk merchants, it might not be relatively as easy to qualify or apply for these intricate services. The reason? It’s all about risk.

By nature, banks and other financial institutions are conservative. That means they’ll only take on partnerships with clients that will not likely cause them any losses. Unfortunately for high-risk businesses, various qualities of their venture make them a liability by default.

There are some reasons why a merchant might be tagged ‘high risk,’ and these may include any combination of the following factors:

  • Operating in high-risk industries
  • Average transaction cost exceeding $500
  • Average monthly revenue of more than $20,000
  • Located outside of the USA, Canada, Japan, Europe, or Australia
  • Most transactions are card-not-present

  • Global credit card processing
  • Accepting payments in multiple currencies
  • Low business and personal credit scores
  • Subscription-based payments

Businesses that meet most, if not all, of these descriptions, will inevitably be categorized as high risk. That means they have greater chances of getting slapped with chargebacks or encountering fraud than any other business. And because banks and other financial institutions also incur fees when processing chargebacks, they try to steer clear of businesses that experience payment reversals more often.

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What is High-Risk Credit Card Processing Features?

High-risk credit card processing providers offer a range of features to keep transactions secure, reduce the risk of fraud and chargebacks, and give high-risk merchants the same security, convenience, and efficiency that other businesses enjoy.

These features are tailored to match each merchant’s needs, and not all providers can deliver the exact solutions. However, more often than not, you can expect to find these standard features through any high-risk credit card processor:

Security and Encryption

People have long been skeptical of the safety of credit card payments. And that’s why the whole chargeback system was developed in the first place — to protect buyers from unwanted, unauthorized usage of their credit cards. But because chargebacks (also called ‘friendly fraud’) bid poorly for businesses, security features help to mitigate the chances of getting slapped with these payment reversal requests.

Credit card processing for high-risk merchants can offer a range of security features, including tokenization, SSL protocol, biometrics, and of course, compliance with EMV and PCI standards for online payment processing. These features help prevent fraud and unauthorized transactions so that buyers and businesses can transact with confidence.


Consistent Uptime

Hey, maintenance happens. And when credit card processing companies have to update their system or experience hiccups in their operations, it’s only standard that their facilities might not work for some time. But that doesn’t mean that buyers will always understand and accommodate the glitch.

Credit card processors that experience too much downtime might strain your reputation, causing buyers to bring their business elsewhere. Thus the best credit card processing companies that can showcase consistent uptime records should be on the top of your list of viable processors.

Contemporary Hardware

Credit card processing doesn’t just happen online. If you’ve got a brick and mortar, it will help find a provider that offers solutions for in-store transactions paid for with a card. There are many different options as far as hardware is concerned. Still, you will always opt for providers that deliver seamless, contemporary, and updated hardware solutions that streamline the payment process.

While there’s nothing wrong with the suitable ol’ point-of-sales terminal, today’s best high-risk credit card processing companies can turn any mobile phone, tablet, or computer into a POS terminal with just a chip. This makes it easier for merchants to adopt the technology with minimal wait time and means that businesses can have more than one terminal at their stores.

Instant Reporting

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Getting instant, accurate, and detailed reports of credit card payments gives high-risk merchants the power to make tailored, targeted, and proper decisions for their business. So a processor needs to provide accessible reports that are updated in real-time for merchants to know precisely what steps to take.

Instant reporting features provide merchants with real-time updates on credit card payments made through any of their available transaction channels — whether on or offline. This powerful solution gives you a bird’s eye view of your business and lets you take steps and solve problems with confidence and total control.

Easy Invoicing

Anything that makes it easier for buyers to make payments ultimately makes them want to make payments. If your system is outdated and slow, or if it requires too many steps and clicks for a buyer to fulfill a transaction, then they’re likely to abandon their cart and look to your competition for their needs.

Fortunately, there’s such a thing as easy invoicing. The best credit card processing companies can invoice clients by sending a text message or email containing customized information on their specific purchases. These messages also link to a payment portal for easy, effortless payments.

Effortless Integration

If you operate primarily online, you’ll want to partner up with a high-risk credit card processor that allows effortless, easy integration with all of the other internet-based solutions you use. One example would be quick integration with Quickbooks to let merchants easily account for their transactions without manually importing information.

Integration also allows merchants to bring together different sales funnel steps so buyers can enjoy a seamless shopping experience. For instance, some high-risk credit card processors integrate their payment portal with online booking features so customers can set their schedules and make payments without leaving the website.

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What is High-Risk Credit Card Processing Benefits?

These solutions pose a range of advantages for merchants. Any business — regardless of size — can benefit from high-risk credit card processing. Still, the ultimate goal is to increase your revenue by providing your buyers’ options, security, and convenience all rolled into one.

  • Diversify your payment methods – Buyers enjoy having options. So if one payment method doesn’t work out, they can choose another to complete their transaction. Adding credit and debit card payments to your repertoire makes sure that buyers will always have options when paying for your products or services.
  • Add a layer of security – High-risk merchants would do well to implement as many security features as possible. For example, opting for high-risk credit card processing helps guarantee that your buyers’ information and money are safe and that you’re protected from the risks of fraud and chargebacks.
  • Make payments easier – Convenience is a significant selling point for businesses in the here and now because buyers want things done fast. High-risk credit card processing reduces the steps it takes to complete a purchase and allows instant, cashless payments that take the load off the buyers’ backs. If you’re still exclusively using dated payment methods that take time and effort, you could be losing patronage.
  • Reduce human error – Making mistakes with real, authorized credit and debit card transactions is impossible. All the information entered into the system — whether by a swipe or a keyboard — is rigorously checked by various bodies for accuracy and correctness. This means that buyers get billed the exact amount every time and that you receive actual payments every time — no spare change, no miscalculations.
  • Increase revenue – Who doesn’t want to bump up their sales? High-risk credit card processing makes it possible for merchants to increase their revenue. Worldwide, credit and debit card payments dominate as the payment method of choice. So if you want to cater to the majority of buyers that prefer using the card to pay, high-risk credit card processing is a must.

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What is a High-Risk Credit Card Processing Fee?

Merchants need to understand that the use of high-risk credit card processing facilities isn’t free. These providers charge fees to cover their expenses and to pay for the services that they offer. And while high-risk credit card processing fees are only a fraction of the total transaction cost, the accumulated amount of these fees can weigh significantly on your cash flow.

Some of these fees include:

  • Interchange Plus – This is charged by the card’s issuing bank and varies depending on several factors. The interchange plus fee is typically a percentage of the transaction cost plus a fixed amount less than a dollar. This fee will make up the most significant chunk of your fees.
  • Assessment fees – This is paid directly to the brand on the card, like Visa, Mastercard, Discover, or American Express. The purpose of the fee is to pay for the assessment of the information sent from the buyer to the gateway. Again, these fees change depending on several factors but are usually lower than interchange fees.
  • Payment processor fees – Of course, the processor will also get their cut. There are many pricing structures available, and some may be more beneficial for your business than others. Make sure you discuss these structures with your provider to get the best deal for your venture.


How Does Online High-Risk Credit Card Processing Work?

Various entities, bodies, and financial institutions are involved in high-risk credit card processing. All of these work together to ensure that payments are transferred safely, efficiently, and correctly. And while the process can be technical, it can be condensed into four steps.

  • Information Collection – The buyer initiates the transaction by forwarding their card information. This can happen by swiping their card through a terminal or entering their card information through a virtual portal.
  • Assessment – The high-risk credit card processing company steps in, takes the information, and sends it through to the issuing bank and the brand on the card to check for correctness. These entities look at various aspects to complete the payment, such as the accuracy of the information and whether the account is sufficiently funded.
  • Approval – If all the information checks out and the buyer has enough money in their account, then the issuer sends their approval to the high-risk credit card processor. This allows the high-risk credit card processing company to debit the buyer’s account of the total transaction cost. Again, any fees are baked into the total amount that the buyer is billed in-store or online.
  • Disbursal – The schedule of fund disbursal depends on your contract with the payment processing company. While other companies brandish instant payouts, others may hold on to payments for some time in case of credit card chargebacks.

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How to Apply for Your High-Risk Credit Card Processing

Looking to integrate high-risk credit card processing into your payment system? Applying for the service is pretty straightforward and may involve the following steps:

  • Pre-application – This involved filling up a form, usually on the provider’s website. This allows the company to determine a merchant’s fitness for a partnership and gives a glimpse into the potential risk of taking them on board.
  • Document submission – Credit card processing companies need to know their clients to provide accurate, appropriate service. They’ll ask for several documents to understand your business better, including transaction histories, credit scores, identification, and more. The provider may take a few days or a few weeks during the process and may require applicants to show up for interviews and submit additional documents to support the underwriting process.
  • Approval – If everything checks out and they find that you’re a fit for their service, they can approve your application. At this point, you’re going to want to review your contract with the help of a professional to understand better what they’re offering your business.


Why Trust Shark Processing?

High-risk credit card processing isn’t anything new, and many companies provide these services these days. So why exactly should you take our word for it and trust Shark Processing with your venture? Well, there are a few good reasons.

24/7 Support

Hiccups happen, and you’ll want a provider to help you through the problems when they do. Being left without support can turn happy buyers into disgruntled customers and cause losses. Fortunately, Shark Processing isn’t about to leave you hanging.

Our clients love our service so much because we’re always there to lend a hand — no matter the time or situation. Our customer support and satisfaction team are always all-hands-on-deck, offering to provide solutions to various problems you and your buyers might encounter along the way.

Secured Payments

Security is a big deal, especially for high-risk merchants. Since your business is at a higher risk of fraud and shady transactions, it’s essential that you work with a high-risk credit card processing provider with the tools and solutions to keep transactions clean.

Shark Processing uses state-of-the-art security features to protect both buyers and merchants. With rugged fraud detection and prevention tools, we work to protect your merchant account from chargebacks and improve your reputation with acquiring banks.

Data Encryption

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When credit cards were first introduced to the general public, they all had the same question in mind — how can we be sure our money will be safe? Identity theft and security breaches are significant threats to credit cardholders. And because paying with a credit card entails sharing those details, people are still worried about having their funds tampered with and their information unlawfully used.

Shark Processing uses the latest data encryption technology to improve consumer confidence to keep their information secure. Sensitive details are kept hidden and protected through tokenization features that conceal information at every step of the payment process so your buyers can shop with confidence.

Record-High Uptime

When high-risk credit card processing companies experience outages and routine maintenance, that could take a toll on your business. If buyers frequently run into outages when trying to pay with their credit cards, they may decide to take their business elsewhere, mainly because hiccups cause them to question how secure your system might be.

With Shark Processing, however, that ceases to be a problem. We tout unprecedented uptime records that allow buyers to make credit card payments without stress. Our systems are regularly monitored and maintained to prevent outages so your customers can enjoy the convenience of cashless payments 24/7.

Seamless Payments Every Time

Isolated payment problems aren’t unique, and sometimes buyers will experience payment failures now and then when trying to pay with a credit card. These failed transactions can happen for no apparent reason, severely impacting customers’ trust and confidence.

We understand how failed transactions can negatively impact your relationship with your consumers. At Shark Processing, we carefully optimize our tools and features so that payments pass through without event almost every time.

The Best There Is

Not to brag, but that’s just the truth. There are tons of high-risk credit card processing companies out there that offer seamless, efficient, and secure services, but very few walk the talk. Here at Shark Processing, we’re proud to say we’re one of few.

We’ve worked with countless clients in the past, providing tailored, customized solutions for all of our partners. By offering the best e-commerce credit card processing tools, we’ve ushered in brighter days for our clients and helped them grow revenue and patronage all in one go.


Frequently Asked Questions

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How do credit card processors determine that a merchant is a high risk?

Depending on how many factors a business meets, they can be categorized as high, mid, or low risk, ultimately affecting the kind of services and the cost of fees they receive. Determining a merchant’s risk involves looking through several factors. These include international credit card processing, significant transaction costs, and low credit scores.

The most significant factor that can categorize a merchant as high risk would be its industry. Some industries are considered high risk because of the nature of the product or service they deal with, the cost of their average transactions or financial service providers don’t want to be identified with specific markets like kratom, CBD credit card processing, or adult entertainment.

These transaction reversals aren’t like refunds that go through a request process. When a customer initiates a chargeback, they jump all the lines and go straight to the card issuer to force the reversal. A business is considered high risk when it’s more prone to getting slapped with chargebacks.

This doesn’t only cost a merchant money but also penalizes banks in the middle. That’s why most financial institutions are careful to pair up with high-risk merchants because chargebacks cost everyone money.

How much time does it take a high-risk credit card processing company to process a payment?

It’s different for every provider, but the difference is often no more than a few seconds. Others might not have any friction and may be able to process a transaction in less than 5 seconds. But that’s not where the story ends.

Payout schedules are different between providers. While some of them might be able to disburse payments straight to your merchant account after a day, others can wait weeks before they payout. These nasty payout terms can negatively affect your cash flow and keep you waiting on funds for goods and services already being sold, sent, and delivered.

Before partnering up with a high-risk merchant credit card processing company, see that you agree with their payout terms. If you want to get your money paid out faster, you can opt for a reserve that takes a portion of your revenue into a non-interest accumulating sub-account that processors can dip into in case of chargebacks and fraud.

What to do if you need high-risk credit card processing?

It’s pretty simple — look for a payment processor that offers the service. High-risk credit card processing is almost always included with any payment processing plus merchant account package, so you should be able to get your hands on the service without too much searching.

If you want the best services you can find, then Shark Processing might be the answer. We’ve worked with countless merchants in the past — even those in the highest risk category — providing tailored solutions that can help increase revenues.

We offer solutions for all industries, like credit card processing for CBD products, adult entertainment services, and more.

What is load balancing and when should I consider this strategy?

Load balancing is a strategy that merchants use to spread out their payments, reduce the chances of credit card chargebacks, and increase transaction volume limits that providers might place on their business. The process involves opening up multiple merchant accounts and applying for multiple high-risk credit card processing services to spread out payments.

Ideally, load balancing can be an intelligent solution for merchants who get lots of chargeback requests and who process large volumes of transactions. This can protect your merchant account from reaching the chargeback limit and may help to increase your revenue through credit card payments.

Can prepaid credit cards be used for high-risk credit card processing?

The short answer is yes; they can be. It all depends on whether or not the card is branded. As long as a card touts a logo from an international financial corporation like Visa, Mastercard, Discover, or American Express, it should be a viable payment option for high-risk credit card processing.

But then again, it depends on the provider. If you want to make sure that you can accommodate prepaid credit cards in-store or online, discuss the matter with your high-risk credit card processing company.

What risks am I taking when I decide to take high-risk credit card processing?

The ultimate risk for high-risk merchants will always be chargebacks. A chargeback can damage your reputation with your acquiring bank and put you at risk of steep fees and penalties that could sap your revenue dry.

Because financial institutions so negatively perceive chargebacks, they can charge as much as $100 for every chargeback initiated by customers. If a merchant reaches a certain number of chargebacks, an acquiring bank can suspend your account without warning. That impairs your ability to take any cashless payment and may cause severe losses. Fortunately, there are loads of tools for risk management in credit card industry companies.

How can I protect myself from fraudulent transactions during high-risk credit card processing?

The answer is simple — choose a provider that offers robust security features. Credit card processing companies deliver a range of tools that help businesses mitigate fraud and detect potentially problematic transactions before they even occur.

These tools use several methods to identify probable fraud cases, like the total transaction cost, differences in the billing and delivery addresses, and the location where the transaction is being placed. Businesses can enjoy high-risk credit card processing without worrying about fraud using these tools.

What is a chargeback and how do I avoid them during high-risk credit card processing?

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A chargeback is essentially a transaction reversal initiated by buyers. They can do this for several reasons, but when chargebacks were first developed, they were implemented to protect buyers against fraud and unauthorized use of their credit cards.

Today, chargebacks are called ‘friendly fraud’ because they give buyers the power to reverse transactions for little and often impractical reasons. The worst part is that the chargeback doesn’t require the buyer to send back whatever goods they received during the transaction because they bypass businesses when initiating a chargeback.

The best way to protect against chargebacks would be to offer easy returns and refunds instead. Many high-risk businesses offer to refund transactions instead and send replacement products free of charge to pacify disgruntled consumers. Of course, it also helps to work with high-risk credit card processing companies that offer chargeback mitigation solutions.

What things to check when I can’t get my high-risk credit card payment processing to work?

The first thing to check would be your credit card processor. There will be times when a processor will have to suspend all transactions to perform routine maintenance. This will prevent buyers from paying with a card for the duration of the system maintenance.

If you check with your processor and find that there are no issues on their end, then the problem might be your merchant account. Your acquirer can suspend your account to reach a certain number of chargebacks or fraud. See that you contact your acquirer to see if your account is in working order.


High-Risk Credit Card Processing You Can Trust

The credit card industry is the payment method for buyers worldwide — don’t get left behind. Even high-risk merchants can enjoy the convenience and security of credit card payments by signing up with a trusted provider.

Shark Processing has been helping high-risk merchants increase revenue with the latest, greatest, and best eCommerce credit card processing tools for in-store and online transactions. Contact us today to find out how we can do the same for you.

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