Welcome to WebmasterWorld Guest from 50.19.53.104

Forum Moderators: buckworks

Message Too Old, No Replies

Is "high risk processing" a makeup term to scam merchants?

     

onlinesource

5:52 pm on Feb 21, 2014 (gmt 0)



So, I been looking into high risk processing. A lot of folks claim that they work with high risk merchants and offer them high risk processing.

Here is my question... what risk if any of are these guys taking? So, this company wants to charge me a $1,500 application fee just to be considered. WOW. Then they want 15% of each sale plus a 10% reserve, resulting in 25% of each sales for the first 6 months.

They also want me to a sign a waiver, basically saying that if something happens that they - as the processor - hold no responsibility and that we essentially take all of the risk.

So, if you aren't taking any risk... why do we need a high risk processor? haha

I get that processors look for vulnerable merchants that are desperate. Are they just miking off my desperation?

Awarn

8:29 pm on Feb 21, 2014 (gmt 0)



Why don't you consider like self insuring yourself. Take the clients but charge a higher fee and set the money aside and see if over a year you are up or down. I know we did that and it worked well.

jalami

1:33 am on Feb 26, 2014 (gmt 0)



"High risk processing" simply means that standard acquiring banks and payment processors will not consider that business model. Have a look at Stripe's long list of prohibited businesses for example: [stripe.com...]

The risk primarily has to do with excessive chargeback fines from card associations, many of which can exceed $25,000 per instance. A high risk payment processor typically submits a large indemnity deposit for such cases and does take the risk that they lose those funds completely because of a bad merchant. Just because you signed a waiver doesn't mean they'll be able to collect.

That being said you shouldn't have to pay an application fee or pay 15% of each sale -- that seems totally extreme.
 

Featured Threads

Hot Threads This Week

Hot Threads This Month