Forumk Credit Card Common Mistakes Business Owners Make With Their High Risk Credit Card Processor

Common Mistakes Business Owners Make With Their High Risk Credit Card Processor

If you are in a business where you are offering what are considered to be high risk products or services, you may be using a credit card processor that can offer you this type of opportunity. For example, if you are selling CBD products, or credit card repair services, you would automatically be lumped into what are considered high risk businesses. There are certain common mistakes that are made by people that have to use these companies. Let’s discuss what the differences between a regular credit card processor, and a high risk credit card processor, plus the mistakes that people make when working with the latter type of company.

What Is A Credit Card Processor Used For?

These are businesses that are typically banks, or associated with them, that allow people to use credit card transaction machines at their place of business. They will be able to take online payments, and also use the machines that are at their facility, so that customers can pay for their goods or services. If you have ever been to a supermarket before, or a hardware store, this is how you have made your payment. However, businesses that are not traditional companies, or those that are not considered high risk, must use what are called high risk credit card transaction companies.

What Is A High Risk Credit Card Company?

These are businesses that are no different from a traditional credit card transaction business. The main difference is that they are not going to abide by the typical rules that the standard credit card processors will. If you happen to have a business that is on that list, then you will need to work with one of these businesses. The main difference is that not only will they work with you, but they are going to charge you a higher rate to use their physical credit card transaction equipment and also charge you more for every transaction. That’s why it is important to compare each business that offers these services, ensuring that you are getting the best deal. People often do this, but there are certain mistakes that they will make just because they are so happy that are willing to work with them and the products or services that they sell.

What Type Of Products Are On This High Risk List?

Some of the products and services that will be on this list will include businesses that sell collectibles, antiques, and firearms. If you are marketing precious metals, or if you offer a web design and development service, you will need to use one of these high risk merchant account providers. You do credit repair? Perhaps you sell magazines, or you offer seminars and coaching. You may sell electronic cigarettes, or offer document preparation services. All of these, and many more, will be considered to be high risk. That is why these companies will be looking for high risk merchant account providers and it will allow them to have a successful company. However, it’s the mistakes that they make that cause them to often lose money because they are selecting the wrong company that can help them.

Serious Mistakes That Business Owners Make When Using These High Risk Credit Card Businesses

One of the first mistakes that they often make is the only read through the website. They will see information that is appealing to them, and if they are approved, they will not read anything else. Unfortunately, what they are often bypassing are the terms and conditions that are associated with that particular company. There are reasons that these companies, for reasons that are listed on these documents, that they can cancel your ability to work with them. Additionally, if you make more sales, or if you start to sell different types of products, they can charge you more for every transaction. They may also have the ability to raise the cost of using their equipment without any notice, and these are things that you would have noticed if you had read their terms and conditions.

Interchange Downgrades And Rate Fluctuations

These are words that you may see on the terms and conditions, but you may not actually realize what they are referencing. In simple language, this is referencing fees. A merchant account provider may suddenly start charging you an extra percentage point for every transaction, or they may charge you double simply because you are taking your payments online. When this is lined out in the documentation, it’s actually in the so-called fine print, those documents where very small print is used to describe what their rights are and what yours are. If you were to understand this, this would have helped you in making a decision to choose another company that would not charge you extra fees just because of how you did your transactions.

Early Cancellation Penalties

This is probably the largest error that people make. They neglect to look at how much it’s going to cost them to get out of a contract. If you have ever had a lease on a building before, or even a store at a shopping mall, you are well aware of how much it will cost you to get out of that lease. In the same way, you are actually leasing the equipment that you are using with these businesses. Even though they will provide you with a way to do transactions online, since equipment is involved, they can charge you a substantial amount of money if you opt out of the contract early. Most of them will require you to sign up for a year, and if you decide to leave them within a few months, you could be looking at thousands of dollars in penalty fees.

Volume Commitment Penalties

One final error that people make is not realizing that they have to have a certain amount of sales every month. Although this would seem outrageous, since you are actually paying them for their services, these people will charge you for either having too many transactions, or they will charge you extra for not having enough. They will state that this is a fair fee, and that is what you need to look for in the documentation. You need to determine if you will be able to make their quota, or if you will exceed the quoted that they allow, before they start charging more for every transaction.

Once you are aware of these penalties and problems that can arise as part of your contract, you would find yourself looking for another high risk credit card transaction business. In fact, some of the other competitors will be well aware of what these other companies are doing and use that to their advantage. They will often advertise that they do not charge you extra because of your volume of sales, and they will not penalize you for an early termination of your contract. This is something that you would know, but if you are not reading all of the documents related to signing up with a high risk credit card transaction company, you could be legally liable for all of these fees which you may not know about.