High-Risk Merchant Account Alternatives

Finding a high-risk merchant account can be difficult for businesses, especially with previous poor credit history. High-risk merchant accounts are also considered high risk because they tend to require higher fees and rates than traditional merchant accounts. In this guide, we’ll explore alternative funding methods you can use if you cannot get approved for an MCC (merchant account). By learning what funding options are available when you don’t have a traditional MCC, you can ensure that your business doesn’t miss out on potential profits due to its financing situation.

Finding a High-Risk Merchant Account can be difficult for businesses, including previously poor credit history.

You can find plenty of options if you’re looking for a high-risk merchant account. However, finding the right one for your business is not easy. Why? Because when it comes to getting a high-risk merchant account, you have to be willing to work with your credit history and look at other things that make your business stand out from the rest.

A high-risk merchant account is any credit card processing that an outside company or organization has classified. This means several reasons why an account may be deemed “high risk” by the processor (and therefore denied). These include but are not limited to:

• Poor payment history in general

• A history of late payments on loans or bills

• A bankruptcy filing in recent years

Factoring and Merchant Cash Advances (MCAs) are two other ways to obtain funding without a consistent merchant account.

Factoring and Merchant Cash Advances (MCAs) are two other ways to obtain funding without a consistent merchant account.

Factoring is when you sell the accounts receivable on your business to a third party. The third party will pay you upfront, then collect from your customers directly.

Unlike factoring, MCAs provide funding through a bank or credit union loan. You can use this money for whatever purpose—to fund an expansion of your business, for instance, or pay off debts preventing you from growing.

Another alternative to a merchant account is through one of many prepaid credit cards.

What is a prepaid credit card?

A prepaid credit card is a payment option that works like a debit card, but a bank or other financial institution issues it. It’s similar to an online account you might set up with Google Wallet or PayPal, except it comes with all the benefits of traditional plastic payment methods like Visa and MasterCard. Prepaid cards can be used anywhere that accepts credit cards and don’t require registration or personal information to activate them. They’re good options for businesses that don’t have consistent revenue streams because they allow you to control how much money goes out each month (and when).

Traditional loans and lines of credit are other funding alternatives to a merchant account.

Other funding alternatives to a merchant account include traditional loans and lines of credit. While these options can be helpful, you should know that they are more expensive than merchant accounts and generally not as flexible.

To run your business profitably, you need access to capital.

To run your business profitably, you need access to capital. Capital is the money you need to start and run your business. Without it, you will be forced to pay high-risk merchant account fees to begin accepting payments through your website and mobile app. There are many ways that a merchant can acquire capital:

• Personal savings

• Family members

• Friends and associates who are willing to invest in your venture

You have several options when it comes to financing your business aside from traditional merchant accounts.

You have several options when it comes to financing your business aside from traditional merchant accounts.

• Merchant cash advances can help you bridge the gap between invoices and payments for up to six months, but they come with high APRs.

• Factoring allows you to get paid earlier than when your customers pay their invoices, but factoring fees can be expensive and may affect your bottom line if the amount of debt is significant.

• Prepaid credit cards are an alternative way of accepting payments online without having to set up a merchant account; however, depending on how much money you charge per transaction and how many transactions you process in a month will determine whether or not this method is worth the cost involved. It’s also important to note that certain types of businesses cannot use prepaid credit cards (e.g., online tobacco sales).

• Loans and lines of credit give businesses access to funds via their bank accounts without having them tied down by contracts or other financial obligations that come with traditional merchant accounts; however, loans tend not to lend themselves well to businesses seeking short-term liquidity problems (such as unexpected costs), they aren’t ideal solutions for short-term needs like those faced by small businesses looking for quick cash injections from time-to-time.”

Many alternatives are available if you can’t get a traditional merchant account.

• You can apply for a merchant cash advance. A merchant cash advance is a short-term loan you get after making your first sale. Sometimes, you’ll even get the money before you sell anything to use as working capital. The lender will cut your sales until the loan is paid back in full and then some—usually, that means a fee of about 20%.

• You can try factoring. Factoring allows merchants to sell their invoices and receive cash immediately instead of waiting 30 or 60 days to get paid by their customers (that’s called accounts receivable financing). This option works best when businesses have high volume and low-profit margins, as they’re getting less than what they could get if they sold the invoice outright or used traditional merchant services like credit card processing.

• You can look into prepaid cards. Prepaid cards allow consumers to load money onto an active account linked with their prepaid card so they can use it wherever debit cards are accepted—it’s basically like having a debit card without any bank account! The downside here is that these aren’t very popular among merchants because there’s no guarantee that customers will ever pay them back; however, if your customers tend toward this type of payment method anyway (like younger generations), then it might be worth looking into this option as well!

Conclusion

The most important thing to remember is that you’re not alone. Many alternatives are available if you can’t get a traditional merchant account. If you choose one of these options, make sure it’s right for your business and don’t forget to factor in any fees or additional costs before signing on the dotted line!