Drowning in Chargebacks? High Risk Merchant Services May Be the Answer


If you’re a business accepting credit cards as payments, you’ll most likely have some chargebacks. However, if you have a high rate of chargebacks, you may find it difficult to be approved for a merchant service provider or you may be charged a higher fee. Chargebacks can hurt your business in many ways, and merchants who specialize in high risk merchant services may be the answer!

What is a Chargeback?

When a customer disputes a payment on their account, it can result in a chargeback to the merchant. Reasons vary for why a customer would initiate a dispute, but the chargeback occurs if the merchant cannot prove that the dispute is inaccurate. For example, the customer could say they never received the product or that they never authorized the purchase.

Most merchants will offer a variety of solutions to prevent chargebacks, but it can be the final outcome if another resolution isn’t found. While most merchants work to satisfy the customer in another way, sometimes the only answer is to refund the customer. This option comes at a cost to the business owner because payment providers charge a fee for each chargeback.

How Chargebacks Hurt Merchants

While most merchants expect to have a few chargebacks as a result of doing business, an excessive amount can be cause for concern. It can lead to a freeze on their account or even having their account terminated. At the very least, the merchant will pay fees and penalties for each chargeback.

Merchants lose business quickly if they are unable to process credit card payments. It can take several days to apply and be approved for a new account, during which time you’ll be required to limit payment options.

Options for Companies with Chargebacks

Some industries lend themselves to more chargebacks. For instance, companies with automated recurring payments may find the customer cancels the payment after it has hit their account. Those businesses should consider a high risk merchant service account that is prepared to deal with the higher number of chargebacks.

Once an account has been terminated, the bank or processor can put your name on the MATCH list, which is the list for terminated merchants. Many processors won’t accept a business from this list, which limits your options.

High risk payment providers are willing to take on companies with a history of chargebacks, but often at a higher cost. If you can get the processor who added your name to the MATCH list to remove it, it will give you more choices for account providers. A company that deals with high risk businesses is better prepared to process applications faster. It can get your account set up quickly so you can continue business uninterrupted.

Go through a gateway provider like MIDsource to help you find a high risk merchant services account that will work with your history and not charge a fortune. Don’t let past issues keep you from accepting online credit card payments and helping your company continue to grow.