Top considerations for high-risk businesses choosing a new payment provider.

Choosing a Payment Partner Carefully is Critical for High-Risk Ventures

As any business owner in a high-risk industry can attest, finding the right payment processing partner is one of the most important decisions a company will make. With the wrong provider, it can mean chargebacks, account suspensions and even losing the ability to accept payments altogether - putting the livelihood of the entire business at risk.

In this article, we'll explore the top factors high-risk merchants need to evaluate when selecting a new payment provider, to minimize risks and maximize opportunities for continued growth.

Define Your Industry's Risk Factors

The first step is understanding exactly why your industry is considered "high-risk" in the eyes of payment processors. Common high-risk categories include online gambling, adult content, cryptocurrency exchanges, bail bonding, debt collection, multi-level marketing, and more.

Within these broad labels, different products or services will face unique compliance challenges. For example, online casinos dealing only in skill-based games have lower risks than pure chance-based gambling. Clarifying your exact offerings upfront will help potential providers assess risk more accurately.

Seek Out Specialized High-Risk Processors

General payment processors are often ill-equipped to properly manage high-risk accounts and the associated compliance requirements. As a result, many avoid these industries altogether or have onerous terms that put merchants at a disadvantage.

Instead, focus your search on payment partners that specialize in high-risk verticals. These providers will have deep experience ensuring regulations are followed, while also advocating on merchants' behalf to payment networks and banks. They understand the nuances of different industries and can help minimize unnecessary restrictions or chargebacks.

Evaluate Underwriting Criteria Thoroughly

All high-risk processors maintain strict underwriting standards to qualify new merchants. Thoroughly research a potential provider's criteria to ensure your business meets requirements upfront. This includes reviewing necessary documentation like business licenses, compliance policies, payout limits, website security certifications, and more. Avoid wasting time with a partner likely to reject your application.

Also, inquire about ongoing review processes. Tight underwriting is critical, but constantly shifting goalposts can introduce business instability. Find a balance that protects all parties long-term.

Understand Technology & Reporting Capabilities

Leading processors invest heavily in proprietary fraud and risk management systems tailored for high-risk industries. Evaluate partners' tech stacks and the data/controls they provide merchants. Advanced reporting with real-time activity monitoring allows issues to be addressed proactively before becoming serious problems.

Consider tools like IP address blocking, velocity checking, address verification, and transaction filtering. Connectivity options for shopping carts and merchant account management dashboards also impact your ability to scale smoothly.

Weigh Fees & Payment Options

Naturally, the total cost of ownership must be factored in. However, avoid focusing solely on rates, as high chargebacks or account closures end up costing much more. Thoroughly compare all potential fees like statement fees, chargeback costs, gateway charges, and more.

Also, assess the payment methods supported. While cards dominate, high-risk merchants often rely on alternative options for viability. Ensure your preferred networks and local payment options are provided.

Vet Provider's Regulatory Compliance

Compliance oversight and expertise are table stakes for any high-risk processor. But truly exceptional partners proactively help merchants stay on top of a changing regulatory landscape.

Inquire about a provider's regulatory licenses, certifications, and approach to keeping current with rules like KYC/AML laws. A history of compliance issues or unclear stances could create liability issues down the road. The best partners see compliance as a collaborative process.

Research Termination Policies

No merchant wants to face a sudden inability to process payments. However, chargeback and compliance issues may force a processor to terminate the relationship on short notice.

Understand clearly what triggers account reviews versus full closure. Inquire about appeal processes as well. Contracts should also specify liabilities like remaining funds disbursement in the case of termination. Transparency protects both your business and its payment partner over the long haul.

Evaluate Customer Service & Support

Beyond technology and risk management, ongoing day-to-day support impacts the user experience and your ability to resolve issues promptly. Consider average call wait times, multilingual agent availability, support response SLAs, and online help resources.

Payment processing issues can escalate quickly, so a responsive support team knowledgeable about your industry is invaluable. Personal relationships with designated account managers also facilitate problem-solving.

Ask for Referrals and Read Reviews

No evaluation is complete without input from existing clients. Ask potential providers for merchant references you can contact within your industry. Speak with peers about their experiences to gain real-world insights beyond marketing materials.

Online reviews on sites like Trustpilot also provide an unfiltered look at customer satisfaction levels. Poor reviews mentioning issues like slow payouts or lack of responsiveness could be red flags, so vet partners thoroughly.

Create a Shortlist and Pilot Test Providers

With diligent research of all key factors, a few potential partners may rise to the top. To decide on the optimal choice, consider pilot testing payment processing with each finalist. This "test drive" period allows you to experience their technology, service levels, and risk management firsthand with real transactions.

Look for the provider most proactive about onboarding assistance, with the most seamless payment experience and the most collaborative approach to addressing any test issues. Their performance during pilots often predicts long-term success as partners.

Conclusion

As a high-risk business owner, choosing the right payment processing partner is mission-critical for long-term viability and growth. While such industries face inherent complexities, the providers that specialize in risk-based verticals can help mitigate compliance challenges and optimize the payment experience when vetted carefully.

This comprehensive evaluation of key selection criteria should give merchants a solid framework for shortlisting and pilot testing options. The ideal partner exhibits deep expertise, transparent policies, supportive technology, and service - all while collaborating as a long-term strategic ally through industry ups and downs. Following this advice empowers merchants to make informed decisions with confidence.

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