How To Find The Best Credit Card Processor For High Risk Businesses
Finding the best credit card processor for high risk businesses is the biggest undertaking in accepting online payments. Whether a business is big or small, start-up or established, a payment processor is like a business partner. They are the ones that takes care and guides merchants through the great and complex world of e-Commerce.
So how does one find a credit card processing provider? Moreover, does your business only need credit card acceptance, or you need to cater to more payment methods for different types of customers. Are you also accepting international payments? These are just two of the most important questions merchants should start with, in finding the right payment processor.
What is a merchant card processor?
A merchant card processor or payment processor is the middleman and payment solutions provider between a bank and merchant. Their services are all about connecting merchants to banks and financial institutions that will enable them to accept their preferred payment methods.
The first thing that payment processors do is to introduce a merchant to the right bank that will accept and provide them a merchant account. This merchant account will hold online payment revenues, according to the currency accepted. There should be one merchant account for each currency that the merchant wants to accept.
When the bank and merchant agree on the processing fees (e.g. Visa and MasterCard fees per transaction, chargeback fees, etc.), the next step is for the payment processor to conduct a Know-Your-Customer process for the merchant, on behalf of the bank. This is where the merchants’ credit records are looked into, as well as the business’ revenue information. If a merchant is tagged as high-risk, there are definitely more document requirements, and the bank may also impose a security deposit on the merchant account in case of frequent chargebacks.
As soon as the merchant gets approved, the next step is integration. The merchants choose from available payment methods, and this is integrated to their website or shop. The most common online payment methods include but are not limited to the following:
- Credit and Debit Cards
- Mobile Payments
- E-Wallets (e.g. PayPal)
- Direct Deposit
- Bank Transfers
Merchants with physical stores may opt for point of sales (POS) transaction, which is done at the counter. This could be through a POS machine with a card reader, or a mobile payment device which can come with NFC or near field communication device.
Some online merchants may choose to accept payments via electronic invoicing (e-Invoicing), or work with a software that provides a seamless payment experience for customers.
When everything is set up and the merchant starts accepting payments, the payment processor also guides the business into getting a (Payment Card Industry Data Security Standard) PCI DSS certification. This was set up by major payment networks Visa, MasterCard, American Express, Discover, and JCB to make online payment processors accountable in practicing security measures, all in an effort to reduce credit card fraud. Depending on the size of the business, the payment processor will guide the merchant in getting PCI DSS certified for their designated compliance level.
Now that you understand the workings of a payment processor, let’s get to the bottom of finding the right credit card processor for your business. These are the most important questions that will help guide you:
Does the best credit card processor for high risk have solutions you’re looking for?
Your business should answer to your customers’ preferred payment methods. It also has to go with the type of business you have. In Europe for instance, the top 3 most common payment method shows it’s e-Wallet such as PayPal and Alipay, followed by credit cards (Visa and MasterCard), and debit card. This comes from comprehensive research done by DPDgroup for the most popular online payment methods in Europe as of 2017. As of this year, however, reports have become more comprehensive in that it shows every country and the list of the top payment methods and providers.
You should also look into the payment processors’ expansion capabilities. Will they be able to help with your business growth, if you ever expand your business overseas? Do they have enough reach and network of financial institutions that will make it possible for you to grow your business abroad? For high risk merchants, this is even more important. The payment processor must the right risk management tools to help lessen instances of chargebacks, and educate you with best practices to mitigate risks.
Are the fees reasonable and cost-effective?
The general rule is to never go for the first best offer. Always compare prices and services with other good payment processors. Ask around, and see how long the processor has been in business. See if you can get in touch with their existing merchants to get some honest feedback. And how do you know if the payment solutions they provide are cost-effective? Always read the fine print. Some of these providers have hidden charges and may deceive you with their service packages.
Another way to see cost-efficiency is learning more about their payment services. Some payment processors offer payment platforms with all-in-one access to data processing, and multiple employee access with specific job levels. A platform where it’s possible to do real-time reversals and rebills, and set solid risk management tools for each merchant’s need.
How secure are their risk management systems?
Even the biggest companies are not immune to data breaches. Take that from the likes of Facebook, Yahoo, and Quora with 100 million user accounts compromised. So, it’s not just the price that you should look at, but the seriousness in which the payment processor takes their data security measures. For high risk businesses, this is even more important.
In the European Union (EU), the rules of General Data Protection Regulation (GDPR) are observed. This is the core of Europe’s data privacy laws. It is timely, and it completely covers all aspects of data exchange, from social media, to financial institutions, private companies, businesses, and government data. On top of PCI DSS certification, your payment processor should be able to guide and educate you on the right risk management tools for your business. One of the most common data security tools for high risk businesses is setting up Velocity Checks. This is a feature that monitors data elements that customers enter in every transaction. It easily tracks and alerts for possible fraud by counting the number of transactions in a single account, the amount, and the IP address, among other things.
Discuss these factors with the payment processor of your choice. They should be open in listening to your business plans, all your apprehensions as a high risk business, and be able to provide the right solutions, guidance, and best practices.
Do they offer the financial settlement options I need?
International acceptance requires more financial settlement features, and even more so with high risk businesses. Make sure that settlements and reconciliations will be timely, complete, and accurate by looking for the following features with your merchant account provider and payment processor:
- Interchange fees
- Settlement data
- Multi-currency capability
- Connection to acquiring banks worldwide
Your payment processor has to be connected with acquiring banks worldwide so it’s much easier for you to set up a merchant account there and start accepting international transactions in no time. The interchange fees have to be reasonable, but it can vary for high risk merchants, and the type of industry you’re in.
How competent is their payment processing team?
From merchant account application to integration, the payment processor of your choice has to value your time. Businesses lose money with the time lost in delays, inefficiency, or worse, unnecessary processes. The payment processing business is not just about networking. It requires expertise, as every merchant comes with different needs. Your payment processor should be able to cater to your needs, troubleshoot quickly, and always be a step ahead by anticipating the road blocks that might come with your high risk business.
Start Today with the Best Credit Card Processor for High Risk
Choosing a payment processor with a responsive and competent team will remove much of the burden from high risk businesses, and save you lots of time, so you can truly focus on business development.
Talk to EU Paymentz’ team of payment professionals and discuss the options you want and get started with accepting online payments in no time. As the best credit card processor for high risk businesses in Europe, we can help.