High Risk Payment Processing and Reserves

As a merchant, high risk payment processing can allow you to accept credit and debit card payments, even though the category of your business is typically denied access to these services. There is generally a higher rate associated with usage of this service when compared to merchants in other categories of businesses. A high-risk merchant account from a company like High Risk Experts can be the solution to your difficulties with payment processing, and your reserves are perhaps one of the most important components of this decision. As a seller online, you are well aware that the anonymity associated with online purchases when compared to traditional retail transactions results in a higher rate of instances of fraud, and online payment processing services typically deny payment processing to providers of certain types of businesses.

Capped Reserve

One method of ensuring protection against loss employed by banks doing high risk payment processing is the capped reserve, in which a percentage of your sales revenues are withheld in order to provide a cushion for the bank in case of loss. The capped aspect of this refers to the withholding of this sales percentage until a certain amount of your revenues for the month are received, oftentimes half of the amount. Oftentimes this can be a great option, consult with the provider on these options.

Rolling Reserve

In this scenario, funds are withheld by the processor, often 5 to 10% of each month’s sales revenues, in order to compensate for the potential of loss. These funds are then released the next month to the business and the cycle begins anew. This option can be used and makes the most sense in certain situations, check out your monthly operating expenses for compatibility with this payment processing method.

Upfront Reserve

In this scenario, the payment processor typically requires an amount of money upfront in order to serve as the fund against fraud and other forms of loss. This can require start up costs, so keep that in mind when making your selection, if you have more than one option. There are however some financial reasons to select this alternative, check with a financial adviser.