A merchant account allows a business to process and receive payments via credit card networks such as Visa & Mastercard. Companies in certain industries are categorized as high-risk merchant accounts, and as such, have to pass through specific requirements to establish merchant accounts either due to the nature of their business and/or because the industry they operate in is known to historically have high chargeback ratios.
Additionally, any businesses processing ‘card not present‘ transactions are categorized as high risk as it is exposed to a much higher risk of a fraudulent transaction. If you have an online business that it’s considered high-risk, it doesn’t necessarily mean you cannot get a merchant account. However, it does mean you would be best served to seek the assistance of a professional to get it set up.
Don’t panic if your business is considered “high-risk”! There are several reasons -which we’ll cover later- that may classify your business as a “high-risk” and they aren’t necessarily negative. You simply need to partner up with a specialist that can guide you and assist you through the process of setting up your merchant account
Many regular and completely legitimate businesses are considered as high-risk and may benefit from opening an offshore high-risk merchant account. These include ecommerce, online gambling and online casino, cryptocurrency and blockchain, as well as forex brokerages. These are all perfectly legal and licensed products, but banks consider them as high-risk.
You can get a high-risk merchant account that is specifically tailored to your business. Fast Offshore has plenty of experience working with clients to get these accounts and to be able to facilitate payments for their businesses.
High-Risk Merchant Accounts vs Low-Risk
|Low-Risk Merchant Accounts||High-Risk Merchant Accounts|
|1) Brick-and-mortar businesses where the credit card is physically presented||1) Online payments where the purchase is made via the Internet and not at a physical store|
|2) Chargeback ratio is low to nothing||2) High chargeback ratio|
|3) Industry is considered low-risk, such as retail, restaurants, home goods, office supplies, shoes, accessories, books, health and beauty products.||3) Industry is considered high-risk, such as gambling, timesharing, virtual currencies, sexually-oriented products, e-commerce, travelling, dating sites, digital products, forex, subscription services, etc.|
|4) Company is incorporated offshore and caters to several countries. Operates in many countries (with various currencies) including those considered to have higher levels of fraud.|
Benefits of Offshore High-Risk Merchant Accounts
There are many benefits of having offshore high-risk merchant accounts. You might think that as a ‘high-risk merchant’ located offshore you would be at a disadvantage, but that is not the case. Benefits of such an account include:
Better chance of opening an account.
As a high-risk merchant applying for an offshore merchant account, you stand a better chance of being accepted. This is because these institutions are used to dealing with merchants from high-risk industries and have tailored their service and products accordingly. While there is never a guarantee, the chances are significantly higher.
No risk with high volumes.
Instead of being penalized for your success with a high number of transactions and values, offshore banks are more understanding of the nature of your business. They understand you may have many clients with high transaction values, and adjust their offerings accordingly.
More accepting of high-risk industries.
Acquirers operate completely legally and have in place compliance, legal, and due diligence processes. They are however considered more liberal with high-risk industries. This means that they won’t immediately decline your business just because you operate in a high-risk sphere. Instead, they will consider the situation on an individual basis.
Access to new markets.
Offshore high-risk merchant accounts don’t typically have as many restrictions on where your customers or payments come from. This means you can carry out legitimate business in more countries, accessing more customers, and increasing your revenue.
Typically, these high-risk accounts allow you to accept more than one currency. Again, this makes it much easier for a wider range of customers to purchase your products, therefore increasing revenue.
Lower set up costs.
Operating in an offshore jurisdiction is usually more cost-effective than onshore. Company incorporation, applicable licensing, corporate structuring, and even fiscal matters tend to be affordable and less than their onshore competitors.
Requirements to Open High-Risk Merchant Accounts
These are the requirements to open a merchant account. Please note that additional documentation may be required on a case-by-case basis:
- Company certificate of registration
- Memorandum of articles of association or an equivalent document
- Register of shareholders dated within the last 3 months and signed by the director of the company
- Certificate of Good Standing
- Register of directors dated within the last 3 months and signed by the director of the company
- Certificate of incumbency or equivalent
- Provide information regarding the specific nature of your business and transactions, anticipated account activity, origin and destination of funds, the reason for receipt and sending of funds.
Additionally, any Officer(s), Director(s), Officer(s), Shareholder(s) and Ultimate Beneficiary(ies) of the company must provide the following documents:
- A certified copy of your passport. In some cases, the bank may request that it’s apostilled by the country of origin.
- A certified copy of a utility bill as proof of residential address that contains the full name and full residential address (issued within the last 3 months). This includes electricity, water, fixed phone line, fixed internet bills as well as bank statements or official government correspondence. Mobile bills or mobile internet bills will not be accepted.
- A bank reference is also required in the format of a letter, on the bank’s official letterhead. Typically it includes information relating to the length of the banking relationship (which should be a minimum of 2 years), the nature of the accounts held, and whether the account holder has been an upstanding client. This letter must have been issued within the last 3 months.
- A professional letter of reference (issued within the last 3 months) of a character nature by a lawyer or accountant of which the shareholder has been a client for at least 2 years. Account-holders can also provide a second bank reference from another bank.
- Updated Curriculum Vitae (resume) duly signed
Tips to Keep High-Risk Merchant Accounts in Good Standing
Once you’ve opened your high-risk merchant account, you need to keep up good standards so you don’t end up with penalties or getting closed completely. Here are some things you can do to ensure the relationship with the bank remains on top form.
Make sure your business uses a clear descriptor so customers know what the payment was for when they see it on their statement. If they don’t recognise the descriptor, the likelihood is they’ll request a chargeback or dispute it. This damages your standing with the account issuer. The more disputes and chargebacks you get, the worse the situation becomes for you.
Good record keeping:
It’s advisable to keep track of every transaction your business makes. This includes IP address, date and time, transaction value, customer communications, and other information. These details will be needed should a dispute arise. Be sure that they are archived correctly and can be accessed easily by your customer service team.
Stay on back of your chargeback rate. If you exceed a maximum of 1% chargebacks, your account can be closed with little notice. Always monitor your chargeback rate and if it starts to increase, take steps to decrease it again.
Excellent customer service:
Great customer service is your best weapon in fighting disputes and chargebacks. Make sure you have highly-trained individuals on the front line accessible via email, chat, social media, and phone. Your team should also be trained in resolving disputes without just resorting to refunds. Excessive refunds can also raise red flags for your provider.
After a customer makes a purchase, you should send them an automated email including a receipt and confirmation. Be sure to verify their emails at the signup stage or before processing the transaction. This helps reduce chargebacks as well as protecting the merchant and reducing the prevalence of fraud.
Checking in with customers to make sure they are happy is an important part of customer service. It can also help in cases of disputes. This way you will know what you’re doing right and wrong, and how you can improve things for them.
What Kind Of High-Risk Merchant Accounts Can You Help Me Get?
We can help clients in opening most types of merchant accounts, subject to approval. Fast Offshore can help you set up an account for any of the following activities:
- Online gambling
- Live Betting
- Online casino
- eSports gaming
- Online sportsbook
- Online lotto, poker and bingo
- Foreign exchange trading
- Cryptocurrency and blockchain
- Fantasy games
Fast Offshore has been working with high-risk clients and industries for over 23 years. This has given us unparalleled experience in placing businesses with high-risk merchant accounts, helping them satisfy their requirements, and get approval. Fast Offshore provides free, 30-minute consultations during which we can clarify any points, answer your questions, and provide expert guidance. Contact us today to schedule yours!
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