Today, there are lots of payment processors to choose from, which can make choosing complicated for businesses who are just starting up. Many people make the mistake of just picking the most famous option on the presumption that “it must be famous for a reason” or because they feel their payment solution needs are fairly simple and “any decent payment processor should do the trick.”
Needless to say, however, but this is usually a grave mistake, especially if you’re working on a small business in a high-risk industry. Companies in such circumstances can often be plagued by fraud, chargebacks, processing delays, high fees and rollback reserves, regulation compliance issues, and many other problems that most payment processors don’t help with (or often make worse), but the right high-risk payment processor can be invaluable for.
So, if you’re a small business that’s planning on growing and thriving in a high-risk industry, here’s our roadmap to success and what you need to look for in your future payment solution. As your business expands, choosing the right international payment solution can help streamline cross-border transactions, reduce processing fees, and ensure secure and seamless payments for customers worldwide.
Know What You Need – How to Find the Right Payment Processor for Small High-Risk Businesses?
The first thing to note here is that different businesses have different needs. While many things are universal and most businesses want little-to-no payment delays or lackluster fraud prevention, there are also niche-specific things that matter differently for different businesses. So, before you even start choosing between the different payment processors out there you should first figure out what are the payment solution priorities for your particular business.
For example, this travel agency success story courtesy to Paycompass shows how finding a payment processor with good multi-currency capabilities can easily make or break a travel agency business. On the other hand, small single-market businesses often won’t need that particular benefit.
So, with that in mind, here are the main things you should keep in mind when look for the ideal payment solution for your small high-risk business.
1. Find the Processing Fees That Fit Your Budget
Managing the processing expenses is important for any business, big or small. In fact larger businesses with higher processing traffic can save enormous sums of money if they pick a payment processor with more manageable processing fees, especially given how high the fees can be for businesses in high-risk industries.
On the other hand, however, larger businesses at least usually have the capacity to handle high processing fees and rollback reserves. Small businesses and startups, on the other hand, usually have a very difficult time handling the recurring and overwhelming expenses of high processing fees and rollback reserves most payment processor charge in high-risk industries. So, finding a processor with more moderate processing fees is usually essential for a smaller business.
2. Reducing Fraud and Chargeback Is Key
Fraud, cyber-attacks, hacks, data theft, and fraudulent chargebacks are a plague for businesses in high-risk industries and can be especially problematic for smaller businesses that operate on razor-thin margins. Even non-fraudulent chargebacks can rapidly bleed the revenue of a small business.
Thankfully, payment processors specializing in working in high-risk niches have top-notch fraud and chargeback detection and prevention tools. From complex detection algorithms and AI-powered tools to innovative encryption, tokenization, and multi-factor authentication (MFA) features, the right payment processor can make your small business much more resistant to the effects of fraud and chargebacks.
3. Get the Right Contract Terms That Work for You
Another factor businesses in high-risk industries must contend with is the overly stringent contract terms offered by payment solutions. Most payment processors offer overly strict terms to protect themselves from the issues associated with high-risk industries, but those terms can often be too much for small businesses. Fortunately, there are payment processors who specialize in high-risk industries and can offer more acceptable terms to businesses.
4. No Processing Delays
Sub-par payment solutions often experience processing delays and even crashes in periods of higher traffic or just due to software errors. Even the simplest delay can mean a loss of clients for a small business, however, as brand loyalty isn’t as much of a factor there and client retention is difficult. Finding a more robust payment solution that doesn’t lead to processing delays is often a must for small high-risk businesses.
5. Regulation Compliance Is Necessary
Regulations are everywhere in high-risk industries. Whether we agree with them or not, they need to be adhered to, as the penalties for not complying with regulations can be rather steep. This is especially true for online and/or multi-market businesses, as those have to work with various regulations in different markets, states, and countries.
Something like the Payment Card Data Security Standards (PCI DSS) is a must for any business and therefore for any payment processor. Choosing a payment solution that complies with PCI DSS and other relevant regulations in your niche is essential to protect your business, avoid costly fines, and ensure secure handling of sensitive customer data.
6. Flexibility Is Key
We often make the mistake of thinking that a small business’ needs are simple. This can sometimes be the case, but not always. It very often isn’t. As we saw with the travel agency example above, even a small business can need a flexible payment processor that can operate effortlessly in a multi-currency and multi-market environment. It’s intuitive to think that only large global businesses would have such a need but that’s not the case.
Similarly, while scalable cloud-based payment processors are usually considered necessary for large businesses with major scalability needs, a small business can also benefit from them. The ability to use your payment processor remotely from anywhere and without the need for specialized hardware or software installation is huge for small and large businesses alike.
A small business needs different things compared to its larger counterparts, but small businesses can differ from one another too. Depending on the traffic specifics you expect in the near future and on your goals, a high-risk small business may also need a highly scalable payment solution that’s cloud-based and enables your business to handle sudden traffic hikes in key seasons.
Something like this can be pivotal for a small business that’s aiming for rapid exponential growth. On the other hand, even payment solutions that aren’t cloud-based and scalability-focused can usually handle the traffic demands of the average growing small business, so, this isn’t as much of a need for most small businesses.
At the end of the day, there are payment processors that specialize in high-risk industries and offer all of the above and more, and there are processors that barely work for small businesses even though they are quite famous and well-marketed. Finding the right payment solution for your needs is a must if you want your company to grow, however, so it’s pivotal that you make the right choice for your business.
