Many merchant services providers have begun offering card processing for high risk business types. Some of such business types require additional information to get approved and can also be associated with higher rates. If you are looking to get card processing for a high risk business you are in luck and now have many choices. Some of the criteria to get a high risk account approved are as follows:

• Your credit report will place a large role in the approval process. Companies will look at past loans and how quickly they were repaid.  They will also look for liens, judgments, and bankruptcies.
• Being able to show strong previous financials and assets will go a long way in the approval process. It is common to have to provide 2 years personal tax returns and 6 months of bank statements.
• It is often good to have a tangible product that is sent to your customers. For example, if you sell mortgage restructuring services, you should have a welcome package that goes out to new customers. Having a tangible product reduces the risk of chargebacks.

However, even with strong financials be prepared to pay higher rates or be required to have a reserve account.

Even the high risk business types are seeing a decline in business. A recent Allstate poll found that half of all Americans plan to cut back on travel in 2009. Travel and tours have previously been considered a high risk business type. The travel industry is getting ready to take a big hit in the coming year. In addition, mortgage restructuring companies are seeing a drop in business despite the amount of people facing losing their homes. Many cannot afford the fees associated with getting themselves out of debt.

One safe option for these high risk business types is to accept Automated Clearing House (ACH) transactions. This allows for an actual bank account to be charged as opposed to taking a credit card from someone who is already in debt.

There are still many options that will enable businesses to accept Visa and MasterCard payments. As long as credit is being issued Americans will continue to use it.

ACH is only used in the United States and Puerto Rico. Similar systems exist in other countries but they have different names and run on separate networks.

Many articles say this is a safer way of taking checks because you don’t have to worry about looking for forged or counterfeit checks. But one thing I learned the hard way is, if you are a merchant and you are using the ACH process you may be in for a huge run around if you have a chargeback. An ACH chargeback does not occur in the same way that a credit card chargeback occurs. A merchant’s bank account can be debited as soon as the consumer reports to their bank that they did not authorize the transaction. The difference is the merchant will not receive a letter requesting proof of the transaction before, or after, the debit occurs. Instead, the merchant will have to dispute the charge with the customer’s issuing bank directly. You may find yourself spending hours on the phone between the gateway, merchant services provider and the customer’s bank.

Another risk when running an ACH transaction is that the money can still remain in a customer account for 2 to 3 days after the transaction is run. This causes a greater risk for bounced checks. Fortunately, if one of your customer’s checks should happen to bounce, you do have some recourse. The most common thing to do is a “Re-Present”, this means to wait a few days and then run the check again. Also, it is generally a good rule of thumb to contact your customer and seek out another form of payment.

There are other options such as Real-Time Electronic Check Conversion. Merchants that receive a lot of bounced checks from customers can use this process to eliminate the high cost of NSF fees. Electronic Check Conversion gives the merchant the option of verifying that there are sufficient funds in the account to cover the check and eliminates the potential risk of a check bouncing. The check is scanned through a check scanner, much like those you may have seen at your local retailer, called an imager. The customer does not have access to these funds as they are on hold. There is a cost to running Electronic Check Conversion and it is typically a percentage of the total check amount.