Is Your Business High Risk? What Does It Really Mean?

Businesses, especially the smaller one face a number of roadblocks while applying for merchant accounts. One of the major roadblocks out of these is the one where your business is deemed as “high risk.” High risk businesses need specialized high risk merchant accounts in order to be able to process payments online.

A high risk business is basically one where there is a potential of significant loss, due to the market fluctuations or simply because of the nature of the business itself. The factors, based upon which a business is classified as high risk or not have been listed below for better clarity:

Credit score – An evaluation of your financial banking and the sources of your investment goes a long way in categorizing your business. If there are grey areas or shoddy details, you will run the risk of being struck down by the high risk name.

Risk industries – Some businesses or industries are by definition considered to be high risk. For example, adult services, online pharmacies etc. all have the potential to come into the public-legal crossfire, a risk that most banking merchants are unwilling to take. All such businesses tie up with high risk processors to meet their payment processing needs.

Charge backs – The number of charge backs the business suffers on an average goes a long way in determining whether it is high risk or not. A high number of charge backs means that you are not doing your job properly and that there is a good chance things won’t improve anytime soon.

Roadmap – While history largely does not matter - you may have had bad times recently – if there is scope to grow and improve, there will be no problem. If, however, there are no signs of improvement for the near future, you will be considered as high risk.

Why Get an Offshore High Risk Merchant Account

If you are a growing business and planning to accept credit card payments from your consumers directly, a merchant would be required to facilitate such provisions. No business can remain competitive without a high risk merchant account; as instant payments have become the norm. In a scenario where a merchant account is must, one that is offshore is the ideal choice, on ground of myriad advantages over a domestic one.

Offshore and Domestic Accounts

As far the definitions for the two go, offshore merchant accounts are provided by banking setups beyond the borders of the country, whereas in case of domestic accounts the provider is a domestic one.

Having a domestic account comes with the added baggage of local concerns. For example, if you are a high risk business or one that may bring bad name to the merchant itself, domestic banks, with a view for their own reputation will steer clear of you. With offshore accounts, this is not an issue.

Advantage of Offshore accounts

·         Offshore accounts provide for accepting multiple currencies, thereby allowing you the opportunity to expand into foreign territory.

·         Offshore accounts come with lower taxation charge, often based around the resident country of the banking service.

·         No trading restrictions in case of offshore accounts, which ensures you can expand and grow without the fear of local scrutiny.

·         There is no volume cap to put a restriction on the amount of business you do.

With its many advantages it is clear that an offshore merchant account is much more rewarding than a domestic one.