How to Classify Your Companies Risk Level

The first thing you should know before entering into any merchant account relationship is what risk level your company is considered. This is generally done by looking at a few key factors.

First, what is the average price of each product or service you provide. The higher the price, the more of a risk factor you become. For example, if you are selling $5,000 designer purses, you will likely be considered high risk due to the amount of money and risk the payment processor takes on to cover these high transaction.

Next look at your product and service, typically high risk tends to be products or services that represent a high risk of charge backs (Adult, Travel, MLM, SEO/Marketing) or where there are legal fine lines (pharmacy, gambling, tobacco/alcohol, replica). If you are listed in any of these industries than it is very unlikely that any merchant account provider will allow you to accept credit cards and normal rates. In addition, you may only be able to accept Visa as most of the other credit cards are much more strict.

Lastly, what is your previous processing history like? If your company has no recent history, or if you have a past plagued by charge backs and refunds, then your company will definitely be seen as high risk.

It is not necessarily a curse to be a high risk merchant these days, many high risk payment processors are happy to allow you to accept credit cards. Just do not be alarmed if they are a little strict or stern on the rules!