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Frequently Asked Questions About High-Risk Merchant Processing
HRM PAY high-risk merchant processing connects your business website to our many gateways, from the online shopping cart to the POS system. We specialize in approving harder-to-place merchants in selected industries:
- Online CBD
- Online Tobacco
- Online Nutraceuticals
Below are lists of answers to our most inquired topics. Reach out to us if you are still looking for a solution to your question.
What types of business do you accept?
We accept all retail, mail/telephone order, and e commerce businesses, however, concentrate on high-risk merchant accounts.What forms of payment can I accept online?• Visa• MasterCard• American Express• Discover• Visa debit cards• MasterCard debit cards
Why is my business considered high risk?
There are many reasons why a business might be considered high risk but here are a few:• You have too high of a chargeback ratio.• You offer recurring billing, subscriptions, or a free trial.• You sell high-ticket items.• You are in an industry that has a reputation of having high fraud and chargeback rates.• You are in an industry that banks have designated as high-risk. Some of the industries that are automatically flagged as high-risk by processors include: CBD, tobacco, e-cig and vape, nutraceuticals, vitamins and supplements, and pharmaceuticals.Keep in mind that all merchant accounts carry some risk. Most payment processors work with conventional (or tier one) banks. These banks focus on retail card-present transactions, and anything that falls outside of that may be considered high-risk. Every bank differs slightly on the types of industries allowed within their credit policy. Payment processors make this determination based on various factors, such as location, nature of business or financial history. At HRMPay, we work with many banks and payment processors that specialize in high-risk merchant accounts and high-risk merchant processing.
What are my requirements to open a retail merchant account?
Normally we require the following documents. Occasionally we will need additional information depending upon your industry:1. A copy of your drivers license or passport to verify identity.2. A voided business check to confirm your account for deposits.3. Current Bank Account Statements (if any).4. Proof of business which can be provided by the DBA registration, business license, articles of incorporation or articles of organization (sole proprietors do not require any of the above).5. Previous merchant statements (if any).6. A signed Merchant Application.We will walk you through the entire process and guide you so you have the best possible chance of approval.How long will it take to approve my application? Once we have collected all of the needed information, the approval process typically takes 2-6 business days. Accounts can occasionally be approved in less than 24 hours, however depending on your industry, some can take as long as 2-3 weeks. Our team always works to get your merchant account approved as quickly as possible!
Are there different application requirements for an online ecommerce account?
Yes. There are more items needed for underwriting to approve a high risk online account. In addition to the items above you would need to provide:
1. Printed marketing materials for your products.
2. A working website with a shopping cart.
3. Proof of business location.
4. An ecommerce compliant website. Click here for detailed information on what constitutes an ecommerce compliant website.
How much will HRMPay services cost me?
We work with several banks and processors, and pricing can vary widely based on many factors. Your account fees will also vary based on your own business, industry, past processing history, and transaction model. You will receive a Schedule of all fees prior to engaging our services.For a custom, accurate quote please fill out this quick form. We promise it’s quick, has NO obligations, and will be totally worth it!One of our account managers will contact you within 24 business hours.
How and when will I receive my credit card receipts from sales?
Your sales will be deposited directly into your checking account. Funds are available within one-two business days after you batch that day’s sales activity.
Can my startup/new business be approved?
YES! Banks typically like to see a long history of transactions, established credit history, and large bank account sums. However, when these items aren’t present, there are many different documents that can be presented to help with the merchant account approval process. We will guide through the process and request the appropriate documents to get your merchant account approved.
Why is underwriting necessary to approve a merchant account?
There is risk involved with the underwriting of both high-risk and low-risk merchant accounts. Credit card transactions are virtually miniature loans that banks must assume liability for. During the application and approval process, the payment processor will have to review your personal credit, your business model, the application and check the MATCH list.
What is the MATCH list (or TMF list)?
The MATCH list (previously referred to as the Terminated Merchant File or TMF) is a database identifying merchants who have had their payment processing privileges revoked by an acquiring bank or payment processor. Processors often use the MATCH system to determine if a merchant account application should be approved or denied. Businesses listed on MATCH pose a risk to payment processors and acquiring banks based on a specific list of reasons. To remain compliant with card brand (Visa, MasterCard, etc.) requirements, an acquiring bank must add a business to the MATCH list within five days of terminating the merchant account due to confirmation or suspicion of:• Excessive chargebacks• Excessive acceptance of unauthorized or counterfeit transactions• Money laundering• Fraudulent activity• Selling products that don’t comply with the acquirer’s requirements or that aren’t included in the merchant agreement• Making unauthorized changes to the website or sales method(s)
What is a chargeback?
A chargeback occurs when a credit card transaction is billed back to the merchant after a sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or product/service dissatisfaction. The merchant’s acquiring bank will charge the merchant a fee for the retrieval of information, and if it is determined that the chargeback is valid, there will be another fee for the chargeback itself. The customer will be refunded their money directly through the credit card company and the merchant’s business checking account will be debited for the amount in dispute.
What’s an acceptable chargeback ratio?
Banks typically want to see a chargeback ratio under 3%. If you are already processing with the bank and have a long-standing history, they will be more forgiving. If you exceed the chargeback threshold in any given month you can run the risk of termination.
How do I avoid chargebacks?
• Make your business name the same as the name on the site.• Post your number on the billing descriptor. If possible, an “800” number.• Provide excellent customer service, and if needed, offer a refund to your customers.It IS possible to dispute a chargeback, but that can be a lengthy and exhausting process. Common reasons for chargebacks include the product not being received, a refund not being processed, a stolen card or fraud, or an accidental forgetfulness to cancel a subscription. HRMPay offers a variety of chargeback protection services that ensure your business is not labelled fraudulent.
How can I protect myself from fraudulent transactions?
Security methods like tokenization, encryption, and fraud management filters help reduce the risk of compromised data. We also recommend you enroll in one of the following programs:1. PAYER AUTHENTIFICATION PROGRAMS: Authentication programs (Verified by Visa and MasterCard's Secure Code) use personal passwords to ensure the identity of the online card user. If merchants use this program, card issuers may occur some of the losses for online fraud that was previously entirely borne by the merchants. Fraud Scrubbing: AVS & CCV alone is not fail-proof. Bolster your confidence and bottom-line by preventing fraudulent orders before they occur2. ADDRESS VERIFICATION SYSTEM (AVS): AVS checks if the cardholder's address and zip code match the information at the card-issuing bank. 3. CARD VERIFICATION METHODS (CVM): Card Verification Methods (VISA = CVV2, MasterCard = CVC2, and American Express = CID use a security code of 3 or 4 extra digits imprinted on the card, but not embedded or encrypted in the magnetic stripe.4. IP MONITORING: Can shed light on the user’s location and if it is in a high-risk area, if a VPN or proxy is used which may be an indication of fraud, or other information that can help with preventing fraudulent activity.5. Use HRMPay’s Fraud Monitoring Management System.
Why is there a monthly volume limit on my account?
When applying for a merchant account, the payment processor requests a monthly volume in total gross credit card sales expected or needed per month. Remember, this number can be increased on an as needed basis. The bank will not offer an unlimited credit facility to merchants. They try to gauge what you need and then grow with you.
What happens if I go over my processing limit?
If you exceed the processing limit by a small percentage amount the charges will go through, however, the excess funds could be held for a short period of time. Forecasting proper monthly volume when we receive your application should alleviate this problem.
When can I get more volume and what is required?
After 3 months of healthy processing (little or no chargebacks) we can request a volume increase. You may or may not need to submit updated bank statements. If your business continues to grow, we can continue to request volume increases when necessary. Our staff are very knowledgeable and will handle the volume requests for you.
What is a Merchant Account Reserve?
A merchant account reserve is a predetermined amount of a business’s revenue held in reserve by an acquiring bank. This reserve protects the banks against unforeseen liabilities in the event of fraud or chargebacks.
Who is Required to Have a Merchant Account Reserve?
Most high-risk merchants will be required to maintain a reserve; usually at the very beginning of the merchant processing agreement. This reserve can be removed after a predetermined length of time. More commonly, though, the reserve is enforced for the duration of the agreement.What are the types of Merchant Account ReservesNot all account reserves are created equal. Processors use different methods for obtaining and holding funds. However, reserves usually fall into one of these four categories:• Rolling reserve. A high-risk payment processor sets aside a proportion of every transaction that you process (which you’ll receive later). This could be as high as 10%. For instance, if you have a six-month rolling agreement, you receive the balance from January in July.• Capped reserve. The processor holds a certain proportion of each transaction until the cash reserve reaches a predetermined level. At this point, the per-transaction contributions will stop but the reserve will remain.• Upfront reserve. A high-risk payment processor receives a set amount from the merchant upfront. Sometimes, the processor may even withhold all transactions until the merchant pays the said amount.
What is an Internet Payment Gateway?
An Internet Payment Gateway is used to securely authorize and process credit cards for e-commerce and brick-and-mortar businesses. An Internet Payment Gateway can be integrated into a website to process payments once your online customer has completed their shopping cart and are ready to check out and pay. The payment gateway securely encrypts the credit card data and returns a response of either accepted or declined.An online payment gateway also provides authorizations for credit cards, batching out (batching out is the process of sending your businesses daily transactions to the merchant processor for payment), and reporting of all your daily transactions.
What platforms do you integrate with?
We can integrate with virtually any platform and, if your website is on an open-sourced platform, we will be able to integrate either our gateway or the gateway of your choice.
How secure is your gateway?
Our payment platforms meet all the industry-standard requirements for systems, data security, and integrity.
