If you have been working with payment service providers for some time, you must be familiar with the high-risk businesses that face difficulty setting up their merchant accounts. Those dealing in CBD products, such as CBD oil, edibles, medicines, and creams, need to research different payment processors to create their merchant accounts.

A merchant account is mandatory for those accepting credit/debit card payments. But how do you find a processor who’s willing to work with a CBD company? Why exactly is this industry considered high-risk, and what can you do to get your merchant account for a CBD business? Keep reading to learn is CBD a high-risk business and how you can get a merchant account. Also, read the common problems in the CBD business in this post.

Is CBD a High-risk Business?

Recreational marijuana is legalized in 23 states in the US. Despite its growing popularity, those offering cannabis—whether for medicinal use or recreational purposes—are considered high-risk businesses. That’s what slows down the growth of the CBD business across the world, as businesses experience difficulty getting a merchant account, which in turn, makes it harder for them to operate their businesses online.

Financial companies do not want to work with high-risk businesses because of the risk involved. But does that mean there’s no way your business can get a payment processor? Well, certainly not! Below we’ve explained some factors that make CBD a high-risk industry and which financial institutions are willing to work with these businesses.

Common Problems that CBD Businesses Experience

Getting into the world of the CBD market is not an easy decision for an aspiring business owner. Even though the recreational use of marijuana is now legal in most states, it faces many challenges that impact your success odds in this industry. Knowing these challenges will help you better prepare for them. In addition, if your business addresses these issues, there’s a good chance you might find a suitable payment processor that can set up your merchant account. Let’s explore the challenges first.

Legal Restrictions

Just because it’s legalized doesn’t mean it has no restrictions. Even in places where recreational marijuana is allowed, there are certain legal regulations that every citizen must be aware of before buying or growing weed.

This includes age limits and other restrictions that create confusion for merchants that want to start a CBD business. The government keeps passing new laws regarding the consumption of recreational marijuana, making it difficult for retailers to keep up-to-date with these regulations. Compliance is mandatory, as a business can shut down if it fails to meet regulatory compliance.

Chargeback Risk

CBD products claim to offer a host of physical and mental health benefits, which seem promising. That’s why it’s used for medicinal purposes. But, the benefits of CBD might vary. There’s a chance the edibles or other hemp-based products do not work. A customer will issue a chargeback if the product doesn’t deliver the results that the business claimed.

Social Stigma

Another challenge that a CBD-based business is likely to face is reputational damage. Since there’s a social stigma surrounding the use of CBD for recreational purposes, the financial company might not want to put its reputation on the line by working with a high-risk company.

Location-based Regulations

Each state has varying regulations regarding CBD use. While all 23 states may allow the recreational use of marijuana, the age limit and other restrictions vary significantly. These location-based regulations and the uncertainty of the laws in different states make CBD businesses high-risk. It increases the likelihood of the CBD processor being found violating a legal regulation when manufacturing, distributing, and working with hemp-based products.

If we see it from the payment processor’s perspective, they carry significant risk for each merchant account they host. A payment processor wants to ensure that your business doesn’t break any regulations concerning marijuana use or harm anyone (whether intentionally or unintentionally).

It’s because of these reasons that financial companies avoid working with CBD merchants. They don’t open their merchant accounts and nor do they provide any banking services to CBD operators. That’s why getting payment processing is often a challenge for those in the cannabidiol industry.

Can a High-risk Business Get a Merchant Account?

Not only CBD but many businesses that sell products associated with social stigma or legal issues are considered high-risk. So, does the label “high-risk” affect your chances of securing a merchant account? Well, yes.

As mentioned previously, businesses that fall into the high-risk category often face difficulty securing a merchant account, as payment processors do not accept their applications easily. As a result, they have fewer options. You should look for a payment processor that does not only set up your merchant account, but does it at a reasonable processing fee, and offers customized support.

Now, some of you might wonder what if we sell our products under different business categories? Know that it is a fraud. Not disclosing accurate information about the goods and services sold, or operating your business by a different name are considered legal violations. You might end up with hefty fines and penalties imposed by credit card processors, card networks, and your banks. If you are found to conduct fraud, your merchant account will be terminated and your business might be listed on the MATCH list, which includes all the high-risk businesses. If that happens, you won’t be able to get any payment processors for businesses you might operate in the future.

Hiding critical business information just to get payment processing is a bad idea. Besides, what’s the need for that when there are payment processors offering banking services to high-risk businesses? You might just have to pay a little higher processing fees than other businesses, but it’s much better than those hefty penalties.

High-Risk Merchant Account for Your CBD Business: Here’s Why You Need It?

Despite the difficulty to find a CBD merchant account service provider, having this account is a necessity for those operating in the Cannabidiol industry. It offers protection against chargebacks and fraudulent activities. Working with a merchant account provider means a lower risk of compliance issues, as these account providers keep up-to-date with the latest regulatory requirements and allow a secure channel to process card payments. They also provide you with the technology to identify fraudulent transactions and decline them.

In addition to these, there are certain benefits of opening a high-risk merchant account that we’ve explored below.

• Reduced Risk of Chargeback and Fraud: With a merchant account, you get fraud detection and prevention tools that can reduce the risk of friendly fraud. These tools check the cardholder’s identity and verify their address and other personal details before accepting their transaction. This prevents the customer from issuing chargeback due to the misused credit cards.
• Identify Sales Trends: You can track the sales activity for your business from the payment portal provided by your payment processor. This helps you identify your customers’ buying behavior.
• Professional Support Team: The payment service provider offers a dedicated support team for assistance. Should you experience any technical issues or payment-related concerns, you can reach out to them for help.

Paying Extra for a CBD Merchant Account

There’s no doubt a CBD merchant pays a ridiculously high processing fee. In addition to that, they might be subject to early termination fees and upfront reserve withholdings. Every payment processor keeps a portion of the merchant’s monthly income in the reserve account to reduce their financial liability.

That’s done to ensure that in case the merchant gets too many chargebacks and they close their business, the payment processor will be liable to refund all the customers that have issued the chargeback. So, they keep a reserve for such situations. Unfortunately, since CBD merchants are at high risk of fraud and chargebacks, the payment processors ask for an upfront reserve.

What to Look for in Payment Processors?

Finding a payment processor that accepts high-risk merchant account opening applications is a challenge in itself. But don’t settle for less. Here are some factors to consider when choosing a payment processor.

• Industry Specialization: Some payment processors offer payment services to businesses operating in the CBD industry specifically. As such, they have extensive knowledge about how they should operate, what steps can help prevent fraud, and the latest trends in the market.
• Customer Reviews: Check what their previous customers have to say about them before hiring. Positive customer reviews indicate that the company prioritizes its clients’ needs. This also means they will be available for your assistance as and when required.
• Fraud Prevention: The right payment processor equips you with the best fraud detection tools, which identify fraudulent activities and decline suspected transactions.

Bottom Line

Most payment processors have implemented strict regulations for high-risk businesses applying for a merchant account. Even if they accept your application, they will most likely charge an exorbitant fee for offering banking services. But you can find a payment processor that charges a minimal fee and offers a host of fraud detection tools with advanced payment technology. Some research will go a long way in helping you find a trusted partner.

If you are like most credit card users, chances are you haven’t heard of the MATCH list. It’s the worst nightmare of a merchant. Every bank or financial institution scans this list to see if the merchant’s name is on it before accepting their request for a product or a service. Also known as the Terminated Merchant File (TMF), a MATCH list is like a blacklist that consists of the account perceived as high risk. You can get placed on this list for one or many reasons.

For instance, violating the privacy policy or terms of a payment processor, exceeding the limit of the chargeback a merchant is allowed annually, or defaulting on payments are a few things that put your business at a high risk of getting blacklisted on this electronic MasterCard list. If you are wondering what this list is about and how you can know if your business is part of it, you are in the right place. This post explains to you the details of the MATCH list. Keep reading.

What is a MATCH List?

MATCH stands for “Member Alert To Control High-risk Merchant”. It’s a detailed list of the merchants that are deemed high-risk by MasterCard. You can find this list on MasterCard Connect any time you want. The MATCH list is a new and upgraded version of the Terminated Merchant File.

It’s obvious that any lending institution or a financial organization offering any kind of help to a merchant will want to assess their risk level before granting them financial assistance. This especially makes sense for an acquiring bank or a payment processor.

When a merchant applies for a new business account at an acquiring bank, the bank evaluates its risk by going over the MATCH list. They do it to ensure that the merchant is not blacklisted by MasterCard. Based on this, the acquiring bank decides whether they’d like to open a merchant account. Note that being on this list won’t terminate your existing merchant accounts unless you have defaulted on a payment or exceeded the chargeback ratio threshold. However, creating an account with a new bank won’t be easy for those falling in the high-risk merchant category.

Acquiring banks, especially MasterCard-affiliated ones, are required to view this list before granting a new merchant account to a random business. If you are found on this list, your application will be straight away rejected. That said, some banks might be willing to get a new, high-risk merchant onboard, but they will most likely charge a sky-high fee and a ridiculously high-interest rate. Whether to accept or decline your merchant account based on your name in the MATCH list is the bank’s decision.

The worst part about the MasterCard MATCH list is that you won’t know you are on it until you apply for a new merchant account and get rejected.

Who Puts Merchants on the MATCH List?

Merchants on the MATCH list are those who have had one or multiple business accounts terminated previously. This makes it impossible for a merchant to hide their canceled account. It’s also pretty risky for the merchant, as being MATCHed means it’ll be extremely difficult to find an acquiring bank or a financial institution that’s willing to accept your new merchant account opening application. As mentioned above, only banks that specialize in working with high-risk merchants can accept your application, but that also means an incredibly high fee. The question is who places you on this blacklist? And is it possible to get your name removed?

The list is administered by MasterCard, so it is the card network that is responsible for adding and removing people from this list. However, MasterCard doesn’t view and monitor each merchant’s performance individually, so it’s usually the acquiring banks or payment processors that put people on the MATCH list. The bank where a blacklisted merchant applies for a new account might contact the merchant’s previous banks or processors to find out the reason they were put on the MATCH list.

The biggest issue with people found on this list is that all their personal details with the reason they were put on the MATCH list are clearly specified, giving banks a clear view of the risk involved with these merchants. That is the reason why most banks don’t even contact the previous banks of the merchant before rejecting their merchant account request.

Why Am I On the MATCH List?

As mentioned earlier, there can be many reasons why your business might land on the MATCH list. But the most common reason is the excessive chargebacks. The card network sets a threshold for the maximum chargebacks that are acceptable on a merchant’s account. If you exceed that limit, you might have to face penalties initially. That may soon turn into an account termination, i.e. if the number of chargebacks keeps increasing.

There’s a reason list code that explains why you are in the MATCH list. This can be anything from engaging in illegal activities, such as money laundering, to not complying with the PCI-DSS standards. The acquirer can cancel the merchant’s account with them if they are found to violate any clause mentioned in the terms and conditions of the agreement. The bank can put the merchant on the MATCH list within five days of their account termination.

Here’s a list of the reasons the acquiring bank can put your account on the blacklist.

• Account data compromise
• A common point of purchase
• Laundering
• Chargebacks exceeding the threshold set forth by the acquiring bank or the payment processor
• Too many fraudulent activities were detected on the merchant’s account
• Unused
• Fraud conviction
• Questionable audit program
• Merchants getting bankrupt or insolvent
• Policy violation
• Non-compliance with PCI DSS standards
• Identity theft
• Illegitimate transaction
• Merchant collusion

It’s quite obvious why the acquiring bank will consider a business that falls in any of the above categories to be high risk, but someone stealing the merchant’s identity and using it to conduct fraudulent activity is not in the merchant’s control. Despite that, there’s nothing they can do to reverse the decision. In addition to these codes, the acquiring bank you have an account with might implement its own set of regulations that can put the merchant at high risk of getting on the MATCH list. It’s best to discuss these policies with your processor before signing on the dotted line.

More About MATCH List

By now, you must know the worth of the MATCH list. The list contains up to 5 years of data stored by financial institutions. Any bank can easily scan the list to find the merchant that applied for a new merchant account. It’s mandatory for banks to check this list before getting a new merchant onboard.

However, the decision of accepting or declining their request is totally up to the processor. It’s possible that a merchant who’s been on the MATCH list for years and has several terminated accounts with different banks can still have their new merchant account opened. As you can see, the main purpose of this MATCH list is to warn the financial institutions of the risk a merchant poses.

Usually, the acquiring bank keeps a merchant reserve account where a portion of the merchant’s income from card sales is stored for emergencies. This amount is released back to the merchant over time if they are in good financial condition. If they exceed the chargeback ratio and end up insolvent, the bank will use the funds in their reserve account to recover the loss.

It’s obvious that any acquiring bank wanting to work with a high-risk merchant will do it for an exorbitant processing fee, and they will most likely sign a long-term contract that involves a high penalty if the merchant terminates the contract earlier than the specified period.

What if My Account Got Blacklisted by Accident?

You might wonder if it’s possible that a merchant’s account can be placed on the MATCH list by accident. Yes, it’s possible but that rarely happens. An acquiring bank won’t just put your account on this list by mistake.

Unfortunately, if the mistake does happen, the merchant won’t be notified about it and they won’t know they are on this list until they apply for a merchant account at some other bank and get rejected. If you find yourself on the MATCH list, contact the acquiring bank or company representative to fix the issue.

They will investigate the matter and remove you from the MATCH list. Note that your details will only be removed after five years of entry. It’s hard for a business to thrive without financial assistance for this long. So, the best you can do is follow PCI-DSS compliance and stick to the bank’s security policy.

Bottom Line

Being on the MATCH list affects the business’s ability to get a new merchant account or any kind of financial aid from banks. If you get flagged, you can contact the acquiring bank and try to convince them to remove your account from the list. Or, you may have to wait for 5 years to have the data erased.

Most merchants accepting card payments are familiar with the merchant account reserves, a portion of your funds kept aside by your acquiring bank for emergencies. The bank issuing your card needs protection from fraud, chargebacks, and other financial issues that can expose the bank to increased risk of liability.

You can think of it as a security deposit that protects the interest of the acquiring bank and the merchant. We’ve explained all you should know about merchant account reserves, how they work, their importance, and how they protect you from unforeseen events. Let’s get started.

What is a Merchant Account Reserve?

A small percentage of the sales from the merchant’s account is set aside as a reserve. The processing bank maintains reserves to ensure protection from future liabilities. The reserve can be used for funding during an emergency.

The reserves are held in a separate account and the percentage of this reserve is determined based on the merchant’s risk level and sales volume. A business that falls in the high-risk category will likely keep more money aside for the reserve.

Note that the bank credits the money back to the merchant’s account if they are doing well financially. The reserve percentage may vary from one processing bank to another. It also depends on the merchant’s monthly sales volume. Usually, banks require businesses to hold 5-10 percent of their monthly sales in reserve.

Understanding the Chargeback Process

Merchant account reserves wouldn’t be needed if all credit card transactions were straightforward. You may have heard of the chargebacks, which a customer can file if they are not satisfied with the product delivery or believe an unauthorized transaction is listed on their card statement.

The cardholder contacts the issuing bank to fight the chargeback and reverse the transaction. The bank will assess the claim and match it with the pre-determined chargeback approval criteria to figure out whether the claim is legitimate.

The bank credits the amount equal to what was debited from the customer’s account and recovers the money from the processor or the merchant’s acquiring bank. The processor refunds the issuing bank and collects this amount from your merchant. The process can become complex when the number of chargebacks grows rapidly and the merchant’s account doesn’t have sufficient balance to pay the acquiring bank.

Here, the acquiring bank is held liable for making timely payments to the issuing bank. To offset this liability, these processors maintain a reserve account so that if the merchant’s account balance isn’t enough to pay chargeback with fees, they can use the reserve to clear all dues. As mentioned before, the amount in your reserve is held temporarily and will most likely be credited back to the merchant if they maintain their account balance.

Who Needs to Have a Reserve Account?

You may have heard of the reserves in accounting. Every business, irrespective of its size and industry, maintains a reserve account and deposits a small percentage of its monthly or annual income in the account to ensure protection from financial loss. These funds come in handy in case of emergencies, like your debt starts piling up or changes in trends and customers’ buying patterns make it difficult to keep your business alive.

Although most merchants accepting card payments require reserve, it’s a must for high-risk businesses. Due to the nature of the business and the increased likelihood of the company shutting down, acquiring banks saves a part of the business’ income in reserves. This mitigates the risk of the bank suffering from a financial loss.

The best example of people that need a reserve account is travel merchants. Since there’s always a risk of the event getting canceled because of weather issues and unforeseen conditions, travel merchants can have a reserve that they can use if anything unusual happens.

That was just one example. Nearly every merchant can have a reserve if they are exposed to high risk. A few industries that absolutely need reserve are CBD, travel, sports betting, tech support, debt consolidation, tobacco, e-cigarettes, vaping, and more. Despite the risk they carry, not every merchant has a reserve account. Whether they need reserve depends on the processing bank, its risk assessment, and its processing history.

Let’s check out the three types of merchant account reserves.

Types of Merchant Account Reserves

Although each processor maintains a separate reserve account, the method of holding funds and the criteria for deciding the amount to be held can differ. Reserves can be categorized into the following types.

• Rolling Reserves

Most merchant account reserves are rolling reserves, in which a specific percentage of the amount from the credit card deposits is held in the reserve account and is released within a short period. It’s mostly 5-15 percent of your deposit. Let’s say your processor has a 10% reserve rate for 12 months. Every month, they will hold back 10% of your total card sales for a period of 6 months.

Based on your financial condition, they will start releasing the money within a month. There’s no maximum threshold for the amount the acquirer can keep in the reserve. It directly depends on the sale percentage. The only restriction here is holding the account for longer than the hold period. As the old funds get released back to the merchant, the new funds from recent card sales are added to the reserve.

• Capped Reserve

The capped reserve also follows the fixed percentage on monthly sales method to withhold money in the reserve. The only difference between capped and rolling reserve methods is that the latter has no limits for the maximum amount that can be withheld. In capped reserve, there’s a limit for reserve. That’s usually half the total processing volume. Once this limit is reached, the acquiring bank can no longer keep reserves.

Let’s say your total sales volume is $20,000 and the reserve holding percentage is 10% with the capped amount set at $10,000. Your acquiring bank will hold back 10% of $20,000 until it reaches $10,000.

• Up-front Reserves

As the name suggests, up-front reserve requires merchants to put a specific portion of their monthly sales in reserve before sales. This is usually 50% of your expected sales volume. The amount is held for a specific duration before it’s released back to the merchant. It doesn’t require any fixed percentage of your profits to be held in reserve. It’s rather a one-time upfront amount, which is also credited back once the trial period ends.

In addition to these, processors may have their individual reserve accounts, such as PayPal rolling reserve and Amazon reserve. While the process of keeping reserve is the same as the above-mentioned categories, they may be additional requirements or features for maintaining merchant account reserve.

When are the Reserves Released?

Reserves do not carry any interest or fees. It’s typically your money that’s stored in a separate account for a brief period. It belongs to you, so long as you do not owe anything to the bank. If you have any outstanding bills, the bank will use the funds in your reserve to clear them. How long the bank keeps these funds in reserve depends on multiple factors.

You need to go over your processing agreement with the bank to know what percentage of your credit card sales will be held in reserve and for how long.

Remember that the reserve is released, but the merchant account reserve is constant. New funds are added to the account and the process goes on until you decide to close your account. The processing bank will then release the entire amount withheld in reserves (given that you are in good standing).

For high-risk accounts, especially those that are not in good standing, might have a longer holding period for reserves. Usually, the chargeback period limit is 120 days, so the processing bank will want to hold your reserve for at least 4 months before returning it to you. The bank may also ask you to pay an upfront amount for the reserve, which might be kept in the bank until you have an account with them.

Can You Negotiate the Reserve Account?

Yes, it’s possible to negotiate your reserve terms with the bank but only after 6 months of processing. The bank will evaluate your processing history and check your financial standing to determine whether to accept your negotiation requirements.

They will also consider your risk level. If you have not got a single chargeback in six months of payment processing, there’s a good chance you can have the bank deduct the percentage of the amount withheld in reserves or shorten the duration for which the reserve is kept.

Bottom Line

Merchant account reserves are a must for processing a bank’s protection against chargebacks and financial risks. Discuss your goals with the bank to know how much they are keeping and whether they are open to negotiation. You can rest assured that the amount held in reserve will be released back by the specified time or during account closing.

No business owner can say that they enjoy 100% risk-free operations. No matter the industry you are in and the types of goods and services you sell, your business is exposed to some risk. However, some businesses are classified as high-risk based on the industry they operate in and their odds of financial failure. In this post, we’ve discussed all you need to know about high-risk businesses, how these companies work with payment processors, and what they do to obtain loans, insurance, and other financial products.

What is a High-Risk Business?

In simple words, a high-risk business is one that credit card companies, banks, and financial institutions may consider highly likely to fail. It can be a startup or an established organization that may carry a high risk of operations. These businesses are considered risky in terms of financial exposure.

For instance, a company at an increased risk of chargeback rates is deemed high risk. You will be surprised to know that many businesses that seem ordinary are considered volatile simply because of some common business practices that put them at high risk of financial failure. They don’t even know they are labeled as high-risk until they apply for a merchant account.

Risk Factors that classify your business in the high-risk category:

Industry Type

The industry you operate in is one of the leading factors in classifying your products as high-risk. For example, tobacco, alcohol, vaping products, chemicals, and other substances associated with strict government regulations may find it hard to obtain loans, raise funding, and get insurance. A small issue with the purchase/sale or other operations, and the business will shut down for good.

Other than that, industries with seasonal revenue that tend to be inconsistent throughout the year are classified as high risk. The rate of gold, for instance, fluctuates frequently. Likewise, the demand for certain products might be high in a certain season and fades totally in another season. These companies also fall into the high-risk category.

Business History

If you have been operating a business for some time now, the processors or lenders may view your operating history to determine your business’ growth rate and overall management. They will review your chargeback ratio, growth, customer satisfaction, and your financial status and performance to figure out whether you should be granted the loan or other forms of financial assistance.

Your processing history volumes about your brand’s image. A consistent business with a high chargeback ratio, for instance, is considered high risk because there must be a reason why customers are issuing disputes against charges. These little factors play a significant role in classifying your business as either consistent or risky.

High Chargeback

Most banks and financial entities keep a chargeback threshold, which a company shouldn’t exceed if it doesn’t want the high-risk label. For instance, a bank might keep a 1% chargeback ratio as the maximum limit for a month. Or, they might use the chargeback in dollars to determine if the company has received too many chargebacks to be considered consistent.

Note that your merchant account can be terminated if you exceed the chargeback threshold. Fortunately, you will find financial institutions that will make an exception for you. They have a limit for the chargeback ratio of up to three percent, which is often sufficient for a business exposed to financial risk.

Your Credit Score

Your credit score is another factor that determines your business’ risk level. Here, your personal credit score matters as much as your business’ credit score. Your business might be identified as a separate legal entity, but a financial institution might still evaluate your personal credit score before lending your business money or approving your insurance application. Pay your bills on time and clear your dues to improve your credit score. The better your credit score, the lesser the chances your business will be considered highly volatile.

Bank Statement

When assessing your business’ risk level, the financial institution will likely order your bank statement to check your financial health. It gives people a clear picture of the total capital you can raise when expanding your business, your savings, and other methods you have adopted to minimize your risk of bankruptcy. Not only to determine your risk level, but a bank statement helps businesses know the size of loan they should approve for your company.

Examples of High-Risk Industries

You can evaluate your business’ risk level by calculating the above factors. As mentioned above, the risk assessment factors may vary from one bank to another. But, a few businesses that are considered risky by most banks and insurance providers are:

• Credit repair companies
• Tobacco, drug, and alcohol manufacturers, suppliers, and retailers
• Adult content or products
• CBD
• E-cigarettes and vaping products
• Tech support
• Gambling
• Debt collection

These are just to name a few. Many such companies that deal in products and services that are taboo or were once taboo are considered risky.

Assessing the risk levels of a business is the bank’s top priority. When you collaborate with a payment processor, you are supposed to stay within the chargeback threshold set forth by these institutions.

Failure to do that will result in your contract termination, as no payment processing company or bank is willing to handle unnecessary liability. When a merchant fails to provide customers with their desired product, the customer may issue a chargeback. Even if the company wins the chargeback dispute, it will negatively affect its image.

How to Know If Your Business is Classified as High-Risk?

Now that you know the factors used to determine the risk level of your business, you can easily know whether your business is considered high risk. Here’s how to assess the risk level of your business.

• Do you operate in an industry that’s heavily regulated by the government and state authorities?
• Where does your business stand in terms of financial status?
• What payment methods do you accept and do they carry high transactional risk?
• What is your chargeback ratio—in percentage and in dollar amount? Check with the bank to know the threshold for cashback and see if you are below or above that average.
• Request banks to give you a copy of your credit score and see if it’s good, bad, or average.

How Can You Prevent Being Labeled as a High-risk Business?

Being a high-risk business doesn’t necessarily mean a negative label. It simply implies that your business fails to meet the standard bank’s criteria for risk assessment. Sadly, there’s no way you can remove that tag from your business without changing an important part of your company and how it operates.

For instance, an alcohol or e-cigarette dealer might be labeled as high risk and unfortunately, there’s nothing they can do about it, except stop selling the product altogether. The reason they are considered risky is their industry type. Still, there are a few things that can be done to prevent being labeled as high-risk. We’ve mentioned them below.

Manage Your Chargeback Ratio

You can’t change the industry type you operate in and the products or services you sell, but you can certainly control a few factors, like the chargeback ratio. Monitoring the number of chargebacks you get every month and taking steps to avoid them can help improve your credibility, thus lowering the risk.

You can strengthen your payment system by integrating 3D Secure programs, CVV, and other security factors to avoid chargebacks and reduce the risk of fraud. Remember, your chargeback ratio matters more than anything, especially in this digital world where customer satisfaction is every business’s top priority. Customers may not want to do business with a company that reports a large number of chargebacks monthly.

Improve Your Credit Score

It goes without saying that your credit score plays an important role in determining whether your business is considered high-risk or not. A poor credit score may increase your risk levels dramatically. Improving this score requires patience and effort from the customer’s end, as paying your bills in a timely manner and clearing all your debts can take a toll on your financial health.

Maintain a Good Cash Flow

Banks and financial institutions may also look at your cash flow to determine the financial status of your business. Based on this, they determine whether or not your business falls in the high-risk category. A lender won’t invest in a firm that has inconsistent cash flow, as they might assume that the company might go bankrupt if it keeps on borrowing debt.

Then again, maintaining cash flow might seem pretty challenging. It may not always be possible to have sufficient capital to run your day-to-day business operations smoothly. Making changes to your company’s expenses and extending your sources of revenue are a few ways you can improve your cash flow.

Bottom Line

A High-risk business is not always unhealthy. In fact, a vast majority of businesses classified as high-risk operate normally and generate a stable source of revenue regularly. These businesses thrive well when the team understands the latest government regulations, trends, financial stability, and other factors.

The Visa Dispute Monitoring Program is a voluntary program designed to help participating issuers and acquirers resolve disputes in a timely and efficient manner. The program provides issuers and acquirers with an objective third-party review of billing disputes, chargebacks, and other claims filed by cardholders. This service is provided at no additional cost to participants.

The program is designed to help participants resolve disputes in a fair and efficient manner, and to improve the overall quality of customer service. The program is not intended to replace or supersede existing dispute resolution procedures. Rather, it is intended to supplement those procedures and provide an independent review of disputes.

Participation in the program is voluntary, and participants may opt out at any time. However, once a participant has opted out, they may not re-enroll in the program for a period of six months.

The program is open to all issuers and acquirers that are members of Visa Inc. There is no minimum or maximum number of disputes that must be filed in order to participate.

What are the Fines applicable on merchants under VDMP?

If a merchant is found to be in violation of the Visa Dispute Monitoring Program rules, they may be subject to fines. These fines can range from $5,000 to $10,000 per occurrence. In addition, the merchant may also be required to take corrective action to ensure that future disputes are handled in accordance with program rules. merchants who repeatedly violate program rules may be subject to additional penalties, including the termination of their Visa merchant account.

What is the process for filing a complaint with the VDMP?

If you have a billing dispute or chargeback that you believe was unfairly handled, you may file a complaint with the Visa Dispute Monitoring Program. To do so, you will need to submit a completed complaint form, along with any supporting documentation, to the address listed on the form.

You will then receive a confirmation letter from the program indicating that your complaint has been received. An objective review of your dispute will be conducted, and you will be notified of the program’s decision.

What happens after I file a complaint?

After you have submitted a complaint, an objective review of your dispute will be conducted. The program will then render a decision based on the information that is available. You will be notified of the decision in writing, and the issuer or acquirer will be required to take action accordingly. In some cases, the matter may be referred back to the merchant for resolution.

If you are not satisfied with the program’s decision, you may appeal the decision to Visa’s Independent Review Panel. To do so, you must submit a written request to the address listed on the appeal form. The review panel is comprised of independent industry experts who will review your dispute and make a final decision.

How does a merchant get out of the VDMP?

A merchant may get out of the VDMP by opting out. To do so, they must complete and submit an opt-out form to the address listed on the form. The form must be accompanied by a letter stating the reasons for opting out.

Once a merchant has opted out, they are not eligible to re-enroll in the program for a period of six months.

High risk merchant services are credit card solutions for merchants who typically work with less than perfect credit, require high-risk processing for their business or have had trouble establishing a credit profile. If you operate either an online or brick and mortar business that caters to the ‘high risk’ market, i.e., anything from medical marijuana dispensaries to fashion boutiques, then you may require high risk merchant services.

The good news is high risk merchant accounts are easy to attain and typically easier to get approved for than traditional merchant accounts. High risk merchants also enjoy: – Lower processing rates: Most high-risk processors offer the most competitive rates in the industry (some charge less than 1% transaction fees)

• Unparalleled customer service: High risk processors treat their merchants like VIPs, offering 24/7 support and processing 99%+ of orders within an hour.
• Easy setup: Signing up for a high risk merchant account is quick and painless — you don’t even need your federal tax ID or SSN.
• Privately owned: Unlike banks, high risk processors are not FDIC insured. However, they are privately owned companies that serve businesses with poor credit or new merchant accounts. Not only do you get to work with the actual owners of the high risk payment processing company, you get personal attention from professionals who are often ex-merchants or ex-bankers.

Who qualifies for high risk merchant services?

High risk merchant accounts are typically limited to businesses that operate in industries considered ‘high risk’. This usually means cab companies, adult entertainment and online dating services. However, even traditional merchants like bookstores and specialty restaurants can sometimes qualify if they meet strict requirements.

Credit card processing for high risk merchants is nearly the same as it would be for any other type of business: You’ll just need to pass a credit review and fill out the appropriate paperwork. Some high risk merchants will be required to post a large security deposit before they can start processing–most likely, these are businesses dealing in large volumes of cash.

One thing you should know about high risk merchant services is that they do not work the same way a traditional merchant account does. In fact, high risk processing is a very different type of service–most banks won’t even provide it to you. If you have been turned down for a traditional merchant account or if your business has bad credit, then you may require high risk processing.

How do I get approved for high risk merchant services?

High risk merchant services are approved very quickly for qualified applicants. The application process is fast, easy and there is no minimum volume requirements or monthly fees like you find with traditional merchant accounts. To get started, all you will need to provide is your business name (including DBA’s), address, state tax ID and a valid email address.

Once approved, you will need to accept your contract and select your processing equipment (EMV Chip Terminal or Credit Card Reader/Swiper). You should also take the time to read through our guides and learn how to increase your business’ profitability: – How To Increase Your High Risk Business’ Profitability With A Credit Card Machine.

The Federal Firearms License is a license that enables the holder to sell guns. The Bureau of Alcohol, Tobacco and Firearms (ATF) issues this license. The application must be filed for on their site and completed with all the required information. From there, if everything is in order, it will be approved within a few months or years depending on the situation and your background. So if you want to get started selling guns, check out this article below for everything you need to know about a Federal Firearms License.

What Is an FFL?

An FFL is a license that enables its holder to sell guns. It can also be used to purchase guns for resale or for manufacturing purposes. The license can be obtained by visiting the ATF site and filling out the application. The application requires all sorts of personal information so getting through it can take some time to finish, but not an excruciating amount. Afterward, the ATF will process it within a few months or so depending on their workload and how busy they are at any given time.

What Are the Requirements for an FFL?

The requirements for an FFL vary from state to state. For example, in Colorado you must be 21 years of age or older to apply for a license. In New York and other states, however, you can get one at 18 years old so long as you have parental consent. Other states have their own ways of doing things, but overall it is required that you are 21 years or older to get one. Additionally to this, you must be a legal resident of the United States and not fall within any other requirements for having your FFL revoked.

What’s the Difference Between an FFL-01, 02, Etc.?

The FFL-01 is for dealing in firearms that shoot only one projectile. The FFL-02 is for dealing in firearms that shoot more than one projectile at a time. Then there’s the 03 and 04 but they both have to do with importing or manufacturing guns so I wouldn’t worry about those. The FFL-05 is the catch all license for everything else so if you don’t fall into one of the other categories, this would be your best choice. It is also the most expensive license so if you’re looking to get started cheap, go with a 01 or 02 straight away rather than a 05.

How Much Does it Cost to Get an FFL?

The application fee is $30 and the license fee is $200 for a total of $230, but only if you’re applying for an FFL-01 or 02. If you’re applying for an FFL-05 then you must pay the $200 application fee and then the license fee multiplied by whatever number of years you plan on having it for. Is there a way to get an FFL without paying the fees?

Not legally, but there are companies out there that will help you through the process in exchange for money, time or both.

How Long Does it Take to Get an FFL?

In many states, getting a license typically takes from 60 to 90 days. In some places it can take up to 120 days so be prepared for the worst case scenario if you’re trying to get something done in a hurry. It isn’t going to happen overnight, but you shouldn’t have to wait an entire year either.

What Are the Downsides of Getting an FFL?

The biggest downside for anyone getting an FFL is going to be its cost. The application fee, as mentioned above is only $30 but the license fee is a whole different animal. This can range from under $100 to well over $1,000 depending on how many years you want the license for and the type of license that you’re applying for. While it doesn’t really matter in your state because it will be an FFL, there are some states out there where having one puts you in a legal gray area.

In the United States, bail is a payment that a suspect of a crime pays as a pledge that they will appear in court. It can also be called an insurance policy for public safety. The money or promise of money (with collateral and/or sureties) paid at the moment of release from custody by defendants, or on their behalf by a bondsman, in order to be allowed to return to their homes before trial rather than being held in jail.

In the past few years America has seen many changes with bail bond agents and bounty hunters, but there are still some things that even they don’t know or understand about the bail bond system. This article will explain what a bail bond is and the most important things you should know about them.

What is a Bail Bond?

A bail bond agent gets paid for posting a person’s bail, also known as the defendant’s “bond.” The amount of money that was paid to release someone from jail before trial is called the bail amount. If the defendant does not appear for his or her court date, the bail amount will need to be paid again in order for them to be released.

Bail bond agents set their own fee schedule for posting bail. Fees can range from 10 percent to 15 percent of the total amount of money posted as bail, depending on state law and company policy. Bail bond agents also receive compensation when the defendant appears in court as required.

How to use an Agent?

A bail bondsman can be used in place of having to pay the full amount of money that is posted for someone’s release from jail before trial. This way, if you do not have the funds yourself, your family or friends can pay the bail bond agent what you owe them, and then they pay the court the full amount of the bail.

Who needs to use a Bail Bondsman?

According to state laws, anyone who does not have enough money to post their own bail must use a bail bonding service. Anyone who uses or attempts to use someone else’s assets or money without authorization, must post their own bail.

How does a Bail Bond work?

When the defendant is arrested, they are brought to jail until their trial. The court sets how much money it will cost for them to be released on bail before their trial date. If someone pays that amount of money to the court, they are free to go until their trial date.

If the defendant has enough money that is available to them, then they can just pay the full amount of bail that was set by the court and be released immediately. If not, they will need to use a bail bondsman service who charges fees for posting bail. That fee is usually ten percent of the full bail amount and the defendant must pay it to be released.

If you or a loved one has been arrested, consult with a local bail bond agent to discuss your legal options. A professional bail bondsman can help provide information on the different types of bails that are set by courts and defendants for which they may qualify.