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High-Risk Businesses and Payment Gateways

Regardless of which industry you are in, your business needs to have a way for customers to pay for goods and services, and for you to receive the payment safely, securely, and in a timely manner. At one time, paying for goods or services consisted of a customer handing a business proprietor a stipulated amount of cash, which would be placed in the drawer of a cash register, in a safe, or possibly in an old, empty cigar box if you were a nine-year-old kid selling paper cups of lemonade on the sidewalk in front of your house. Later, you might have physically carried the cash to your bank and deposited it in your account. It was a simple, straightforward, and inexpensive system that had very few things that could go wrong.

 

Times change, however, and payments today tend to consist of electrons zipping along wires more than a few coins placed in a cigar box. Payment processing involves credit cards/debit cards and other means of payment in which there is no physical transfer of money from the customer to the merchant. Customers may not even have to take their credit cards out of their wallets. The system certainly has benefits, including convenience and the ability to make payments remotely, but it also adds more steps to the process, and more steps means a greater likelihood of something going wrong.

First, Select a High-risk Payment Processor

High-risk businesses face some additional challenges related to providing a way for customers to make payments. The most significant of these is the difficulty of obtaining a merchant account either at a traditional bank/financial institution or a payment processing company. If your business is considered by a bank to be high risk, you will at the very least have to undergo a lengthy application process that will likely have requirements that are more stringent than those used for applicants that are not high-risk businesses. Traditional banks are very reluctant to take high-risk merchants as clients, so chances are good that your application will be rejected.

 

As we have discussed in other articles, this obstacle can be overcome by finding a payment processor that works with high-risk businesses. Such businesses are common enough now that it shouldn’t be too difficult to find one. However, it’s important that you don’t just select one at random. Be sure to find a payment processor that has the software, equipment, experience, and expertise needed to provide consistently trouble-free and reliable payment processing, as well as a solid track record of security.

(Matters related to the selection of high-risk payment processors are addressed in more detail in other articles, both in general and in the context of specific industries. See, for example, [URL] and [URL].)

Even if you have found a good high-risk payment processor, you still need a way to get the payment from your checkout to the payment processor’s system. That way is a payment gateway.

What is a High-risk Payment Gateway?

A payment gateway is a technological middleman between your business and your payment processor. It’s a program that encrypts and transmits credit card data and other transaction information from a business’ checkout to the payment processor. It is a critical component in ensuring secure and reliable online payment acceptance and transaction processing. A high-risk payment gateway is simply a payment gateway provided by a company that works with merchants who are considered to be high risk. As with high-risk payment processors, there are even payment gateway providers that specialize in high-risk businesses.

 

Fortunately, finding a payment gateway is relatively easy once you have opened an account with a high-risk payment processor. Because payment gateways only encrypt and transfer transaction data to the payment processor, they are subject to less risk than payment processors. There is still some risk involved, however, and not every gateway provider is willing to work with high-risk businesses. The good news is that, just as with payment processors, there are payment gateway providers that are set up to work with and handle the needs of high-risk merchants, sometimes as their specialty.

What to Look for in a Payment Gateway

High-risk businesses need payment gateways that can protect them from fraud, chargebacks, and other threats. A high-risk gateway should include controls and screening functions that identify possible risks to your business. Its platform should have filters that block transactions based on specific parameters, such as IP addresses and suspicion of scammers. Its system should be able to verify data and authenticate the identities of people attempting to use a credit card, etc.

 

Other things to look for are PCI compliance, the ability for you to collect your funds without undue delay, and support for diverse means of payment, such as mobile wallets, electronic checks, ACH transfers, major mobile payment solutions, or other payment options you want to use. Some payment gateways even support payments made with cryptocurrency. If you do business internationally, it may be a good idea to ask about support for any relevant foreign currency.

 

In addition, look at the customer support system. Problems can occur at any time—day, night, or holidays—and some problems can immediately drag your revenue flow to a dead stop, so, ideally, customer service will be available 24 hours a day. At the very least, you should be able to get help during your business hours, or in other words, during any time in which there is a possibility that a payment could be incoming.

 

Finally, the payment gateway has to integrate well with your business, both from the perspective of the specific type of business and the systems and software you use.

 

The easiest—and usually the most effective—approach is to utilize a high-risk payment processor that provides its own high-risk payment gateway. Doing so reduces the chance of incompatibility between systems. For example, if the payment processing and payment gateway are provided by two different companies, an update or upgrade of one could negatively affect compatibility. If they are both provided by the same company, any maintenance required for either is likely to take the other into consideration. In addition, it streamlines and centralizes payment system administration, which means you will have more time to grow your business.

 

Be sure that your high-risk payment gateway fits your business needs. It should keep the amount of administrative work that you have to carry to a minimum, and should protect your business when accepting payments. It should take the worry out of collecting funds, and provide a level of customer service that promptly and appropriately addresses questions and concerns whenever you have them. The important thing is to make sure that the payment gateway is able to meet the needs of your business so that you are better able to meet the needs of your customers.

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