Document Preparation Merchant Accounts

How The "High-Risk" Designation Affects Your Business

How Do Chargebacks Impact Merchant Processing Approval?

High chargeback rates are one of the primary reasons why certain industries are designated “high-risk.” As one example, subscription box services — including some of the monthly product deliveries that are so popular today — are subject to a high number of chargebacks because customers can cancel their subscriptions at any time. And as we discussed before, a document preparation merchant account is especially prone to higher-than-usual chargeback rates.

The more customers cancel or get refunded on a credit card payment, the more money is lost by the credit card processing service. If a certain industry typically suffers a higher-than-normal amount of customer chargebacks, it’s automatically put on the high-risk list.

Which Industries are Considered High-Risk?

Here’s just a partial list of industries designated as high risk by credit card processing companies:

• Document preparation services
• Cannabis vendors
• Adult entertainment
• Property management
• Vacation and tourism
• Online dating
• Fantasy sports
• Privately-owned health/beauty companies
• Collectibles/antiques
• Pay-day lending services
• Gun retailers
• Nutraceutical retailers
• Subscription billing services
• Online gambling and gaming
• Pawnshops

One thing to note: When it comes to merchant processing approval, it’s not always an even playing field, even within an industry. For example, travel and tourism businesses are considered high-risk, but not if they’re owned by a major, nationally-known corporation, such as a major airline. The same goes for beauty and health vendors and retailers. In the end, a lot of it comes down to underwriting.

Merchant processing companies are typically funded or underwritten by major banks and credit card companies. This means that the financial entity that’s doing the underwriting withstands the risks of taking on a new account, as well as any losses that might come from chargebacks or other payment defaults.

However, even for these major financial corporations, underwriting doesn’t provide a limitless flow of financial backing. If a specific business is part of a high-risk industry, then no matter how successful that business might be, it will generally be declined approval by a standard merchant processing company. However, there may be exceptions if the company is owned by a major nationally-known corporation — such as, in the travel industry, an airline, or a hotel chain.

Can Payment Processing Services Benefit Your Document Preparation Company?

If you’ve already been denied approval by a payment processing company, then you’re probably operating without the benefits of credit card processing and automated payment options. Whether you’ve applied yet or not, now’s a good time to take a look at some of the benefits you can get from expert high-risk merchant processing services:

The convenience of credit card payments

No matter what kind of business you’re running, your customers will thank you for offering credit card payment options. Statistics show that credit cards and debit cards are the most popular payment method in the US. And by offering credit card and e-check payment options, you’re providing your customers with a faster, easier way for them to pay you. This can result in quicker payments for your services, as well as higher customer satisfaction.

Also, by accepting credit cards and electronic payments, you’re greatly mitigating the risk of getting bad checks. There’s nothing more exasperating or embarrassing than having to track down customers to let them know that, usually through their bad bookkeeping, their checks have bounced.

A more professional image for your business

As a business, you’ll look far more reputable and businesslike if you can provide multiple payment options, including a variety of electronic payment options, for your customers. This not only adds more convenience for your customers, but it also adds a higher level of professionalism for your company’s reputation.

As a doc prep service provider, you’re dealing with important, life-altering documents for your clients, and you know how important it is to project an image of trustworthiness and reliability. The ability to offer a full roster of automated payment options will help you maintain your reputation as an industry professional who offers the highest level of service to your customers.

The ease of mobile app payments

If your business isn’t yet accepting mobile app payments, then you might have some catching up to do. Mobile app payments have become the industry standard for a variety of businesses, with more than 44 percent of transactions worldwide being made via mobile apps. With merchant account processing services, you’ll be able to offer your customers convenient payment options through multiple devices.

Tracking and management tools

Payment processing services provide real-time payment tracking of all payments, from the minute they’re received until they’ve been fully processed. Merchant processing companies also offer a variety of management tools that can help you eliminate tedious weekly and monthly bookkeeping.

High-risk Merchant Processing Companies

In recent years, several high-risk merchant processors have appeared on the market, thanks to the demand from burgeoning (and booming) industries such as cannabis and nutraceuticals. These specialized merchant processors work with credit card companies and banks to take on these high-risk accounts.

Because of the risks, however, it’s an unavoidable fact that these companies will charge a higher fee than a standard merchant processing company. This fee helps absorb the cost of these risks while ensuring that you’ll be able to enjoy the same services that traditional merchant processors provide. Likewise, a reputable company will give full disclosure on all fees, and keep them as low as possible for their merchant account clients.

While this is all a plus, it’s important to know that high-risk payment processors aren’t a one-size-fits-all proposition. Some of them tend to focus on one trending industry — such as cannabis — while others might offer only limited services to high-risk businesses. Likewise, some high-risk merchant processing companies might still deny applications for certain industries like property management or doc prep services.

Finding The Best High-Risk Merchant Processing Company

Before you start searching for a payment processing company that will approve your document preparation merchant account, it’s important to look for some qualifying factors that ensure you’ll be getting the services you need. Here’s what to look for:

Does the payment processing company accept accounts in your industry?

The payment processor you choose may not accept a document preparation merchant account, so be sure to first find out if they’ll work with your industry.

Does the company offer fair pricing and reasonable rates?

While higher fees are unavoidable for high-risk merchant processors, there’s no excuse for ridiculously high fees, or a multitude of fees tacked on to every single service. For example, some merchant processors add extra fees for chargebacks, while others don’t. Look for a company that keeps these fees to a minimum, and offers full disclosure on what it charges, and why.

Equal fees for credit cards

In the eyes of some merchant processors, not all credit cards are the same. For various reasons, they’ll charge different fees for MasterCard, Visa, American Express, and Discover; but in reality, these fees should all be the same. If they’re not, then ask why not; and if you’re not satisfied with the answer, then find another payment processing company.

A variety of payment options

Even with high-risk merchant processing services, you should be able to enjoy the same benefits that standard merchants enjoy, including a variety of online payment options for your customers. A good processing service will offer automated payment options for every major credit card, as well as e-checks and mobile app payments.

If you’d like to provide credit card and electronic payment options for your customers, Zenti can help. Zenti helps high-risk merchants get the payment processing services they need to stay competitive and successful. And for your document preparation business, Zenti can help you increase customer satisfaction and loyalty, as well as eliminate tedious monthly bookkeeping. To find out more, contact us for a free consultation, and discover how our experts can help you get the payment processing services your business needs — and deserves.