Larger, high-volume businesses receive lower processing rates and often get more generous contract terms.
All processors will carefully judge your business to determine whether you fall into the “high-risk” category.
If, for whatever reason, your business is determined to be a high-risk one, the consequences can be severe.
If that’s not bad enough, you might even have a liquidated damages clause in your contract that raises the price of breaking it even further.
While the processing industry is generally moving more toward lower monthly and annual account fees, you won’t be so lucky as a high-risk merchant.
While some business types, such as pornography or drug paraphernalia will almost always be placed in the high-risk group, others may or may not be, depending on your processor.
Some merchant services providers have very strict guidelines for determining high-risk status, while others use more relaxed criteria.While most non-high-risk businesses have some ability to negotiate the length of their contract terms, the industry average is around three years for the initial term, with an automatic renewal clause that extends it for one-year periods after that.These lengthy contracts have been very unpopular with merchants, and the trend within the industry is moving more toward month-to-month agreements so you can cancel your account at any time without incurring a penalty.There’s also a third category of providers who specialize in placing high-risk businesses.While their rates and fees aren’t a good deal for non-high-risk merchants, they can often provide a merchant account for high-risk businesses that have been turned down by other providers.Remember that every provider has their own criteria, so while you might be considered a high-risk business by one provider, you might be approved for a regular, non-high-risk account by a different provider.