As a growing business, it is critical to establish and maintain a merchant account as a means for accepting credit card and debit card payments. Most businesses have stopped accepting checks, and the circulation of cash is decreasing in the face of rising credit card popularity.
However, there is a distinct difference between a standard merchant account, and an account with what is referred to as managed risk.
Basically, a bank provides an account for a merchant to accept payments, normally for credit or debit cards. The payments can be accepted using a physical terminal, like a standard credit card machine, or an e-commerce payment gateway. There is usually a contractual agreement between the merchant and the payment processer, which outlines the fees, rates, and any terms of initiation or cancellation. Merchant accounts will not always open accounts with merchants who work in higher-risk industries.
Managed Risk Accounts
A managed risk merchant can be defined using the following:
- Collectibles or antiques
- Businesses that sell adult items
- Telemarketing services
- SEO companies
- E-cigarettes & Vape
- Tech Support
- Time Share
Essentially, any merchant that does business in an industry where failure or minimal profits are more likely. Managed risk accounts must be opened with a merchant account provider who specializes in overseeing managed risk merchant accounts. However, not many account providers are willing to do business with managed risk merchants.
It is important to shop through merchant account providers. Because many banks aren’t armed to open managed risk merchant accounts, it may feel difficult to find a good provider, and it can be easy to accept the first provider you find. It is essential to avoid jumping on the first account provider you can find. Due to the nature of managed risk businesses, many managed risk account providers may charge egregious fees, fines, or rates. Experts advise merchants to research their options thoroughly to find a provider who is more apt to offer shorter-term contracts, an absence of cancellation fees, and flexibility with your business preferences.