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What to Do When a Payment Processor Closes Your High-Risk Merchant Account?
Dealing with a sudden closure of your high-risk merchant account can be a stressful experience. High-risk businesses often face unique challenges, and losing a payment processor can disrupt operations and affect cash flow. This guide outlines steps to take when your high-risk merchant account is closed, explores alternatives, and provides insights into finding a reliable payment processor with the help of Independent Sales Organizations (ISOs).
Understanding High-Risk Merchant Accounts
High-risk merchant accounts are designed for businesses deemed more likely to encounter fraud, chargebacks, reputational challenges, or financial instability. Common high-risk industries include:
• Adult entertainment
• Online gambling
• Travel services
• Health and wellness products
• Subscription services
• Digital goods
Due to these risks, high-risk merchants often face higher fees and stricter terms from payment processors.
Immediate Steps to Take
When your payment processor closes your high-risk merchant account, immediate action is crucial:
1. Contact Your Processor
Reach out to understand the reasons for the closure. Sometimes, issues can be resolved by providing additional documentation or addressing specific compliance concerns.
2. Review Your Contract
Examine your agreement with the processor to understand any clauses related to account termination. This can provide insights into whether the closure was justified and if you have any chance to push back.
3. Secure Funds
Ensure that any funds in the merchant account are transferred to your business bank account. Payment processors sometimes hold funds for a period after account closure, so make sure to clarify the timeline for fund release.
4. Inform your customers
Contact your clients to proactively let them know about the issues with delayed billing and deactivated payment methods.
5. Consider alternative payment methods
If the credit cards are terminated due to the card traffic being closed by the payment processor, consider using APMs (Alternative Payment Methods) such as wallets, Open-Banking, et cetera.
Evaluating Payment Processors
Forced to jump ship and in need of a new, stable vessel? When evaluating potential payment processors, consider the following criteria:
1. Reputation
o Check online reviews and ratings.
o Look for any red flags, such as frequent complaints about fund hold, poor customer service and practices of sudden account terminations.
2. Fees and Rates
o Compare fees, including transaction fees, chargeback fees, and monthly fees.
o Ensure you understand the pricing structure and any hidden costs.
3. Features and Services
o Assess the range of services offered, such as fraud protection, chargeback management, and support for multiple currencies.
o Consider whether the processor provides tools and features that align with your business needs.
4. Integration
o Verify that the payment processor integrates seamlessly with your existing e-commerce platform or point-of-sale system.
o Consider the ease of integration and the availability of technical support.
5. Customer Support
o Evaluate the quality and availability of customer support.
o Look for processors that offer 24/7 support, especially if you operate internationally.
6. Performance
o Consider and learn about the approval rates and the payment processor’s general system and technical infrastructure stability.
o Learn about how reliable and functional the reporting system is, how the added value services such as dashboards/portals operate and if they experience any common issues or outages.
The Role of Independent Sales Organizations(ISOs)
Independent Sales Organizations (ISOs) play a crucial role in helping high-risk merchants find suitable payment processors.They are third-party companies that partner with payment processors to sell their services. Think of them as your representatives in the relationship with the processor (at least that is how a reputable ISO should act). Here’s how ISOs can assist:
1. Expertise
o ISOs have extensive knowledge of the payment processing industry and understand the unique challenges faced by high-risk merchants.
o They can provide personalized recommendations based on your specific business needs.
2. Network
o ISOs have established relationships with multiple payment processors.
o They can leverage their network to negotiate the acceptance of a merchant (which may sometimes be difficult, or impossible without their assistance) as well as better terms and rates for high-risk merchants.
3. Support
o ISOs offer ongoing support, including assistance with the application process, integration, and troubleshooting.
o They act as intermediaries between the merchant and the payment processor, helping to resolve issues efficiently.
4. Added-Value Services
o ISOs offer additional services, such as chargeback and fraud prevention methods, consultancy, and connections with payment processing gateways to help develop your business while protecting chargeback and fraud thresholds.
How to Find a Good ISO
To find a reliable ISO, consider the following steps:
1. Referrals and Recommendations
o Ask for referrals from industry peers or business associations.
o Recommendations from trusted sources can lead to reliable ISOs.
2. Research
o Conduct online research to identify ISOs that specialize in high-risk merchant accounts.
o Review their websites, case studies, and client testimonials.
3. Interview Multiple ISOs
o Schedule consultations with several ISOs to compare their offerings and expertise.
o Ask about their experience with high-risk industries, the processors they work with, and their fee structures. A particularly important approach is to ask industry specific, challenging questions to the ISO to verify their expertise –the more in-depth the interview, the more you can be sure you have chosen a well-established Partner.
4. Check Credentials
o Verify that the ISO is registered with the major credit card networks (e.g., Visa, MasterCard).
o Check for any certifications or industry affiliations that indicate credibility.
Conclusion
Having your high-risk merchant account closed can be challenging, but there are steps you can take to find a suitable alternative quickly. Understanding the landscape of high-risk payment processors, conducting thorough research, and leveraging the expertise of ISOs can help you secure a new payment processor that meets your business needs. By taking proactive measures and evaluating your options carefully, you can minimize disruptions and continue to sail smoothly in your high-risk industry.
If you are looking for a reputable ISO active in high-risk space, do not hesitate to contact us via the online form!
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