With the age of digitalization, there is a steady rise in digital payments. In the industry, including small-scale and large-scale business organizations, demand for online payments has increased folds. To stay in the competition, various high-risk payment processors and facilities are necessary.

All financial institutions have different rules and guidelines for their applicants to get an approved merchant account. Since financial risks are high, these merchant accounts are labeled high-risk accounts. It leads to a lengthy and time-consuming process to get approval.

The demand for digital payments has increased as customers find it easy to make recurring payments once they have decided on any services. With increased demand, payment security comes into light. Customers invest large sums of money, so it is necessary to opt for secured payment gateways.

What are Merchant Account Providers?

Every business, physical or online, needs accounts to carry out their financial process of payment through credit cards or any online transactions every day. These accounts proceed with the role of money settlements between buyer and seller. These accounts refer to as Merchant Accounts.

In every industry, nearly every company relies on subscriptions or other forms of recurring payments. Banks and financial institutions provide these services and are called Merchant Account Providers. The customers’ work gets easy and convenient as they only have to decide on making payment once for their recurring services.

With the facility of merchant accounts, you can keep your customers engaged in your services continuously. These services are very crucial to stay in business and cut-throat competition.

Some of the best high-risk merchant providers are PayPal, WorldPay, and netplay. These are all in one commerce platform with no contract or set fees. These platforms are super secure accept payments in all currencies and take from 7 days to 15 days to transfer payments.

Subscription Services

Subscription marketing generates recurring revenue through a subscription pricing model where existing customers opt to receive the goods or services regularly for a monthly or annual fee. The subscription offering goals are to increase customer retention and lower customer acquisition cost.

Rather than selling products individually, a subscription offers periodic usage of the product or service. This periodic cycle can be daily, weekly, monthly, semi-annual and annual. Renewal of any subscription can be periodic and activated automatically so that the cost of a new period gets paid automatically.

In the digital age, where everything is available on online platforms, the demand for subscription-based services has also increased. All the exclusive content is available by subscribing to that platform. For payment settlement, merchant accounts are necessary. They are an essential part of business as they add a layer of convenience to the customers.

Almost all businesses are high-risk businesses. The factor that makes them beneficial is that they bring big-scale profits. Since the scale is large, the risk is also high. There are many chances of financial losses which can adversely affect merchant account providers. But with possibilities of losses, chances of big profit are also high.

Benefits of Subscription Services

It’s not all doom and gloom about high-risk merchant accounts. There are various benefits when dealing with these accounts. You can deal with an international audience which leads to higher exposure, something you cannot do with low-risk merchant accounts.

In any industry, no big scale business is a low-risk business. Small-scale businesses have low capital invested and deal in smaller sectors where they do not have to face high losses. In those cases, profits are also small-scaled.

You can sell anywhere. The low-risk business has a smaller window to operate. High-risk businesses can deal with a bigger audience and earn higher profits, accessing different currencies in larger markets.

If the business strategies go in the correct direction, they can benefit the business in the long run. Since once a customer has decided on taking a recurring service, their payments will continue to benefit the business.

You can also benefit from business expansion. Bigger audiences and big-scale platforms do not limit you to a specific sector. You can deal in various products and services and create ample opportunities to expand your business. This benefit is not available to low-risk businesses.

Drawbacks of Subscription Services

Banks and financial institutions provide all the payment-related services. They offer such services after analysis of the financial risks involved. According to financial institutions, big-scale merchant accounts possess high financial stakes and are high-risk merchant accounts. It takes effort to process cards under such conditions.

Getting approval for merchant accounts is a difficult task for big-scale organizations. Because of the financial risk involved, they have to go through several steps and processing fees to get their merchant accounts approved. Since the risk is high, banks and financial institutes put many penalties and require a lot of legal formalities to process these accounts.

Apart from the time taken to process the merchant accounts, these organizations face several other challenges like higher account fees, early termination fees, lengthier contract requirements, fewer pricing options, increased chargeback fees, transaction limits.

Solution

Finding a payment processor for high-risk merchant accounts is challenging. When a bank or financial institution labels a company a high-risk merchant, it becomes difficult for them to find a payment processor.

Try to look for a company that specializes in high-risk payment processing. A merchant service provider that specializes in working with high-risk payments, including those that use recurring and subscription-based payments, will have an understanding of your company and payment needs.

Maintain healthy cash levels that display the picture of financial stability. If you do not have stable cash levels, it is difficult for financial institutions to rely on your credibility. Because of the high-risk involved, banks need financial stability in trusting your company. Keeping debt levels low can further help in better financial stability.

Disclose all material and relevant information during the process of application. Being transparent can win you extra brownie points.

Each processor has its own set of requirements. Keep your documents ready, bank statements of the last six months, and a few years of tax returns.