Merchant accounts facilitate the small businesses to deal in the banks and payments. Some industries are more prone to risk than others. Restaurants are the least risky businesses. Health and beauty products and advocate services merchant accounts are considered medium-risk accounts. The businesses that involve the investment in the manufacturing of products and services are the high-risk merchant accounts. No matter what your industry is, some things may put all kinds of businesses at risk. Here are the top 3 risk variables mentioned:
Payment methods and processes
What type of payment method do you choose for the transactions of your business payments? A magazine with annual subscriptions or quarterly subscriptions poses more risks to the merchant account providers. If a business ends up within the initial six months after collecting an annual subscription, what will the consumers do? it will leave many question marks for the merchant account provider.
Many merchant service providers or banks like to have a look at the previous billing method and financial history of the business. Monthly billing or billing after the service provided is considered more secure for a bank account.
Things get more complicated when you accept credit and debit cards. It all depends upon the options you choose at the time of the agreement with the bank or relevant services.
Business Financial stability & history
If you are a beginner in the business world, the merchant account provider will seek assurance for the stability of your business. Merchant accounts with a history of financial losses or poor financial stability are more prone to the risk. The financial stability of the business, current assets, and successful historical pace of the business always matter.
If your business has a larger Chargeback history, your merchant account is at greater risk. It disturbs the reputation of your business. Why does chargeback happen? It may happen due to poor products, delayed delivery, partial delivery, or lack of delivery. Chargebacks put the merchant account providers at the edge of losses.
The more authentic quality assurance a business provides the lesser the chargebacks. The merchant account providers are often interested in having a look at the history of the business. The older the business the more reliable it is considered.
How to avoid the risks?
Merchant account experts advise the merchants to turn the billing method from annual or quarterly to monthly. Postpaid services are more likely to be safer than prepaid services. Postpaid services help to reduce the chargebacks.
Additionally, the money at the back end is the strength of your business. Never utilize the assets of your business rather try to increase the assets. It will help to strengthen the merchant’s business as well as the merchant’s account service also.
Paypound merchant account can ideally save you from potential risks and dangers to your business. For further details :
+44 800 832 1733