For a business that is considered as highly risky, it can be quite difficult to find a payment processor who will be willing to set up a merchant account. Fortunately, there are services that do offer high-risk merchant account options. And in this post, we will look at the five things you should keep in mind when setting up such an account.
Know Your Processing Requirements
Before you set up an, know what your processing requirements are. Steve Johnson from High Risk Merchant Account LLC explains that there are credit card processing solutions for businesses who are high risk or have low credit scores. Typically, merchant accounts offer the following –
- A credit card payment terminal through which you can receive credit card payments from customers.
- A POS system which will help you to track everything right from the item ordered to the payments received.
- Mobile payment processing which allows you to accept payments like Apple Pay
- Online Payment processing for businesses which have an e-commerce website
Only a few businesses will ever require all the above services. Decide on which ones you want and avoid those that won’t be necessary. By doing so, you can easily cut down wasting money on unnecessary payment processing solutions that may not even be used in your business.
Only Choose A Dedicated Service
Though there are many services that offer merchant account, only few will be willing to accept high-risk businesses. And even among those who do provide a high-risk merchant account, there will be services that don’t specialize in it. Instead, they will only be offering such a service in return for higher fees. As far as possible, stay away from them. You must only open a high-risk merchant account with a service that is specialized in it. This will ensure that you are getting the service of a payment processor who exactly understands the nuances of your business.
Buying Vs Leasing Equipment
When you sign up for a merchant account, you will likely be required to procure certain equipment like credit card processing terminal, POS systems, and so on. And on this front, you will have two choices – you can either buy them outright or lease them. Since you are just starting your business, it is very likely that you might be tempted to opt for a lease in order to keep the investment funds in check. However, this is a bad option since you will end up losing money in the long run. It is far more profitable for you to buy the necessary equipment rather than rent it.
Finally, put some serious thought into the merchant account contract. Ideally, you should opt for a month-to-month contract since that is the safest option. However, the problem is that it can be incredibly difficult to find a high-risk merchant account service who will offer a month-to-month contract. As such, you might have to agree to the usual three-year contract. But be sure to inquire about the early termination fee. Some of the contracts will have a huge fee that can be financially harsh on you in case you have to shut down your business.