An exciting part of growing a business is when you wade into uncharted territory. In the case of payments processing and the fintech industry, this could be when exploring a vertical that’s relatively new to the game.

This excitement can be quickly dampened when banks and other financial institutions not only don’t share in the joy, but remain staunchly apprehensive because of the perceived risks of a specialty vertical.

What some see as “new” and “special,” others might view as “hard-to-place” or “high-risk.” But what does it all mean?

What is a “high-risk” business?

The types of businesses that fall into this category aren’t always apparent. A business can be considered high risk depending on not only work that it does or goods/services it sells, but also just by how it operates in general. Some red flags include the following.

• Businesses that have been around for a short time.
• Businesses that lack financial stability.
• Businesses that have an increased likelihood of fraud.
• Businesses that have a history of chargebacks and/or a greater risk of future chargebacks.
• Businesses that sell a lot of “big-ticket” items.
• Businesses that sell certain types of items or services (such as ecig retailers, dating apps, firearms).
• The industry a business is in (such as adult entertainment, gaming/gambling, or telemedicine).
• Business owners who lack credit or have poor credit.

Additionally, some businesses can be classified as high-risk if they’re a startup without much capital or if they process large volumes of transactions. Merchants can also be designated high-risk if they do business with customers in certain countries.

What does this mean for payments/transactions?

Being classified as a high-risk business throws a wrench in a few things — most notably that the owner will usually pay higher processing and chargeback fees than other businesses. The application process for payment processing is also often more complex, sometimes taking more time and requiring more documentation and financial disclosure.

Furthermore, some payment processors hold some of the merchant’s cash in reserve or cap transactions each month, which holds up cash flow and ultimately makes forecasting that much more difficult on the business. Additionally, some payment companies that process payments under one merchant identification (MID) number, might freeze an account if the business exceeds a chargeback limit.

So, what can be done?

The trick is to partner with a payments processor that has been accepting traditionally hard-to-place businesses for decades. North American Bancard, for instance, takes a different approach to providing services to high-risk accounts. Utilizing in-house risk and underwriting departments helps merchants get faster approvals and higher approval ratings.

Additionally, access to NAB’s fraud and chargeback mitigation tools reduce risks while support teams assist businesses with representations to challenge chargebacks.

High-risk businesses also have the option to use a broad range of payment technologies, such as gateways for ecommerce payments, multi-currency conversion, in-store EMV, and mobile payments.

As for fees, NAB benefits high-risk businesses with its Edge Program. This solution, which includes software, signage, and hardware options, enables businesses to establish a compliant Cash Discount Program (along with Flat Rate Pricing), which allows merchants to add a fee to all sales and discount it when the customer pays with cash.

Moreover, ISO Agents can help open doors for these growing businesses by partnering with NAB. With NAB’s Registered DBA & ISO Programs, we offer a range of benefits to help our Sales Partners help merchants.

• $600 Activation Bonuses.
• 14x Profitability Multipliers.
• $10,000 Bonus Caps.
• State-of-the-art Sales Partner & Developer Portals.

This allows partners to sell payment processing successfully to more businesses, while giving merchants the tools they need to expand, giving space for everyone to grow in new verticals. NAB now supports the following.

• CBD
• Debt repayment, collections, & credit repair.
• Firearms
• Gaming and fantasy.
• Vape, head, & smoke shops.
• Telemedicine
• Tribal lending.
• Travel
• Crypto wallets.

Contact North American Bancard (888-229-5229) to learn more.