High-risk industries often face steep credit card processing fees due to increased payment risks and stricter regulations. These elevated costs can significantly impact businesses in sectors like online gaming, cryptocurrency, and adult entertainment, where high risk credit card processing is the norm. Here’s how businesses can combat these fees and optimize their payment processing strategies.
1. Shop Around for High-Risk Payment Processors
Not all payment processors cater to high-risk businesses, and the ones that do often have varying fee structures. To reduce costs, take the time to compare multiple high-risk payment processors. Look for providers that specialize in your industry, as they are more likely to offer competitive rates tailored to your needs. Transparent pricing structures, clear terms, and minimal hidden fees should be a priority when making your selection.
2. Negotiate Processing Rates
Many business owners aren’t aware that credit card processing rates can often be negotiated, especially for high-risk accounts. If you’ve built a solid transaction history with low chargeback ratios, you can leverage this data with your payment processor to request a lower rate. Highlighting your business’s reliability and financial stability can help create a compelling case for improved terms.
3. Minimize Chargebacks
Chargebacks are one of the primary risks that make payment processors classify businesses as “high-risk.” Reducing the frequency of chargebacks can directly lower additional fees tied to the risk classification. Here’s how you can minimize chargebacks:
- Clearly display your return and refund policies to customers.
- Use descriptive billing descriptors to reduce confusion on customer statements.
- Offer excellent customer support to promptly address disputes before they escalate.
Lowering your chargeback ratio over time can demonstrate your business’s credibility, leading to a reduced “high-risk surcharge.”
4. Implement Fraud Prevention Tools
Fraud is a major factor that drives high processing fees for risk-classified businesses. Investing in fraud prevention tools like Address Verification Systems (AVS), CVV verification, and 3D Secure authentication can mitigate these risks. Payment processors often reward businesses that proactively reduce fraud with lower transaction fees. Fraud prevention tools not only reduce fees but also improve customer trust and security.
5. Evaluate Interchange-Plus Pricing Models
Flat-rate pricing models are common for high-risk credit card processing but can result in inflated fees. Instead, consider switching to an interchange-plus pricing model, which transparently breaks down the processor’s markup and the card network’s interchange fee. While interchange-plus pricing may have variable rates, it can often lead to lower overall costs for high-risk businesses with consistent transaction volumes. Consult your payment processor to see if this pricing structure better suits your operations.
Take Control of Your Processing Costs
Navigating high-risk credit card processing doesn’t have to drain your business profits. By conducting due diligence, negotiating rates, minimizing chargebacks, implementing fraud prevention tools, and selecting the best pricing model, you can significantly reduce your fees. Proactively managing these aspects can improve your operational efficiency and set your business up for long-term success.
