Running a business is a huge responsibility. It often comes with a lot of work and challenges. The evolution of digitization and convenient payment processing has made shopping experiences smoother and hassle-free. However, it has also given several business owners a cause to worry. They are left with no options but to evaluate new payment methods as fewer and fewer customers opt for cash payments these days. The preferable thing to do is to approach high-risk credit card processors. However, not all businesses will find this a fitting solution. If you run a small or medium-sized business, you might want to look into third-party high-risk credit card processing. Let us go ahead and examine what it is and how it works.
What Does High-Risk Payment Processing Mean?
Banks and payment processing companies consider certain business types and industries risky. High-risk payment processors are companies that provide merchant accounts to high-risk business owners. Your business venture can be termed as high-risk if it has a possibility of a high chargeback, fraud if you deal with inconsistent demand, if you have poor credit score, etc. Other than these parameters, there are also industries like adult sites, businesses that deal with vape and marijuana, credit repair, weapons, plant-based supplements, etc., that are considered high-risk by default.
High-risk payment processors are seasoned companies with enough experience in managing high-risk businesses. They will treat your merchant account with absolute priority. These payment processors help you, the business owner, secure a merchant account and handle all your transactions. Good payment processes will also offer top-notch security measures to prevent any cyber-attacks.
Opting for a high-risk payment processor speeds up the procedure of application and acceptance. They have considerably lower limitations than banks and other low-risk payment processors. Nevertheless, their charges and processing fees can be pretty high for small to medium business owners. Not everyone can afford high-risk credit card payment processing services. If you fall under this category, you may want to consider contacting a third-party high-risk payment processor.
How Third-Party Credit Card Processing is Different From Merchant Account Payment Processing
Setting up a merchant account is very costly for small ventures or businesses that process fewer transactions. In such cases, third-party high-risk payment processors can be an ideal substitute for merchant accounts. Recent surveys show that more than 50% of customers prefer to use methods that support cashless transactions. If you do not wish to be left behind, now is the time to make the switch.
Third-party credit card processes enable you to accept payments online without opening a merchant account. Businesses that own merchant accounts benefit from directly processing and settling payments from their account. On the flip side, businesses that establish a contract with third-party processes can use an account owned by those payment processors. That means you can completely dodge the process of opening a merchant account.
Who Needs Third-Party High-Risk Credit Card Processing?
Third-party processes can have several advantages. They do not cost too much, so they won’t break your bank. Moreover, they are easy to install. Third-party processes will allow you to utilize their merchant accounts to process all your transactions. That will also enable them to run anti-fraud solutions before they see a transaction through.
If you are starting a venture or are relatively new, third-party high-risk credit card processing might suit you well. It is especially ideal for businesses not expecting credit card transactions at high volume. However, it is crucial to remember that third-party payment processors also need to make money somehow. In their case, the earnings come from the fee that they levy per transaction percentage. It may prove to be high-cost for businesses that process large payments.
Here are some points you should keep in mind when deciding on payment processing.
- The Size and Nature of Businesses
For smaller ventures, merchant account providers can be too costly. If your business does not go through hundreds of transactions in a month, it is more suitable to go for a third-party payment processing service.
- Your Online Transaction Volume
With third-party payment processes, you are only charged when you make a transaction. It can be an eye-catching arrangement for businesses owners that go through a limited number of transactions in a month.
- The Time You Can Spend On Waiting
Acquiring a merchant account can be a time-consuming process. Moreover, there is no guarantee of acceptance or denial. If you want to start making transactions quickly, third-party payment processing might be the way to go.
Does Third-Party Payment Processing Have Any Advantages?
In contrast to merchant accounts, several third-party payment processes only levy charges on the transactions made. You can bypass the sizable deposit fee and the monthly charges. Many third-party credit card processors will avoid charging fees, like early termination fees and customer support fees.
When forming a contract, most third-party payment processes will offer you a simple and short-term agreement. If they offer a contract, they provide for a monthly renewal and place very few restrictions. With the absence of long-term contracts to bind you, you are free to terminate your processing services nearly whenever you want.
The Final Verdict on Third-Party Credit Card Processors
While on the one hand, third-party payment processing seems like a good idea, on the other hand, it is not without its demerits. It might be beneficial for some, but the per-transaction fee can be too costly for businesses with more significant transactions. If you wish to begin a third-party payment processing service, it is advisable to gain enough knowledge on the matter.
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