High Risk Payment Processing

When a business is experiencing difficulty securing payment processing services from a local, domestic provider, the merchant might need to look for a high risk payment processing service.  If a merchant decides to go offshore for a high risk payment solution, most the same domestic services are offered through high risk payment service providers for slightly higher fees, but do not generally have a problem with the types of transactions processed by their merchants that a domestic service would have.

Merchants can have a number of reasons why they would need to look to a high risk payment processor for their business' merchant services such as:

  • Business Model
  • Business Location
  • Chargeback Percentage
  • Sales Volume / Sales Size
  • TMF Merchant

Whether the company is operating with a business model that is classified as high risk or has a history of being a business model that can be complicated to approve; merchants might have to resort to an offshore or high risk payment processing solution for services.  Some businesses might be operating a retail or general ecommerce business, but might also have to look outside their country borders to find payment processing services.

Sometimes the business is operated out of a country or territory that does not quality for domestic merchant services.  In these instances, merchants will have to look for an offshore merchant account and bank account that will work with their business setup.  Another location issue might be dependent on the owner - trying to establish a domestic merchant account while a citizen of a foreign country.

Businesses that are considered to be high risk generally run the possibility of having higher than average returns and chargebacks.  Depending on the business and the products that are sold, their chargeback percentages can differ but overall their history will prevent them from obtaining a domestic payment processing solution, thus forcing them to find an offshore payment processor who will accept their business type.

Other types of transaction patterns can be a reason for merchants to have trouble finding payment services from a domestic provider.  Merchants that have a history of extremely high volume or excessively high sales tickets might encounter trouble when searching out a domestic merchant services company.  For this reason, many high volume and high ticket businesses look offshore for their payment processing needs.

In some instances, the business may be perfectly suitable for a domestic merchant services provider to work with, except for problems with the business owner themselves.  In some cases, merchants might have been placed on a TMF (terminated merchant file) list due to some issues with a previous payment processor.  Whether there are outstanding fees due or the previous business had a bad track record, merchants facing this issue will more than likely have to seek out a high risk payment processing company to set them up until they are able to remove themselves from the TMF list.

The most common forms of high risk payment processing services available to merchants are:

In some businesses, merchants are able or prefer to accept payments direct from a customers bank account for both convenience, security and cost savings features.  Some merchants might not be able to qualify for a merchant account and have to rely on check processing as their only way to accept customer payments.  This can be accomplished either through a high risk ach processing program or a high risk check 21 payment processing program.

One of the first payment systems to use checking payments was ACH, also known as the Automated Clearing House.  This system has been used since the 1970's, but has become outdated with the creation of other payment systems that have become better suited for check processing services; and in particular the high risk check processing industry.

After 2001, the banking systems in the USA devised an alternative check processing solution that eliminated the need for paper checks called The Check Clearing for the 21st Century Act, also known as Check 21.  The Check 21 payment processing service quickly became a preferred check payment system for high risk merchants due to the features built into the program that fit the needs of high risk payment processing services.

Aside from accepting bank payments, merchants do have the option to accept high risk payments from a credit card or debit card.  This is generally the preferred method of high risk payment processing of merchants due to the simplicity and rapid approval and funding from transactions.

Merchants that are unable to set up with a domestic payment processing service generally go offshore looking for a similar service that can accept their business.  Finding a high risk payment processing solution is possible as long as the business can work and function with the terms of a high risk payment processor.