Why is my business considered high risk?

High-Risk Factors Banks and merchant account providers consider a business as high risk because of a high level of charge backs, a merchant receives credit card payments, but customers cancel transactions; refunds and returns; and credit card fraud, according to High Risk Expert.

What are high risk business transactions?

A high-risk transaction is any type of transaction that has historically incurred more chargebacks than the average transaction type.

What are considered high risk industries?

A high-risk merchant account refers not only to those industries that deal with adult content, gambling, and casinos. A high-risk merchant account can belong to those merchants who offer travel services, to airline companies, movie streaming platforms, social networks, and life coaching businesses.

What is a high risk account?

A high-risk merchant account is a payment processing account for businesses considered to be of high risk to the banks. As high-risk businesses are more prone to chargebacks, they come with the need for paying higher fees for merchant services.

How does industry impact a company’s risk?

Each company faces risks that are influenced by the type of industry the company is in. Because industries as a whole face inherent risks, companies in the same industry face the same risks or similar risks. However, depending on the company’s operations, additional risks that are not industry-inherent may exist.

What is a high risk business name?

Industries such as real estate, financial services, gambling, etc. are considered high risk therefore banks tend to avoid lending to them. If you name a business associated with a high-risk industry such as John Doe Real Estate or John Doe Investments or John Doe Real Estate Holdings, etc.

Why are politically exposed persons high risk?

Politically Exposed People (PEPs) are a risk when it comes to money laundering because of their social status. This status means that companies see them as a higher risk customer because of their opportunities to gain assets through unlawful means being greater than usual.

How does economic risk affect business?

Economic risk refers to the possibility that changes in macroeconomic conditions will negatively impact a company or investment. For instance, political instability or exchange rate fluctuations can impact losses or gains. Investing always comes with risks, but economic risk is usually the most difficult to predict.

What is meant by business risk?

Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything that threatens a company’s ability to achieve its financial goals is considered a business risk. Because of this, it is impossible for a company to completely shelter itself from risk.

What is considered high-risk for a business?

Banks also consider companies that don’t provide collateral for loans or have bad credit histories as high risk. If the industry you are in causes your company to be deemed high-risk, you must make sure that it is compliant with federal, state, and local laws as well as all regulations related to risk.

What are legal risks?

Legal risks refer to damage or any loss incurred to a business due to negligence in compliance with laws related to the business. It can be encountered at any stage of business proceedings.

What is a high-risk ecommerce business?

High-risk businesses are simply merchants who are perceived to have a greater risk of financial failure. There is a certain amount of risk associated with all payment processing, and eCommerce in particular; there’s no way around that.

Is your business prepared for a legal risk?

Risk is an integral part of business, and while most businesses have a good understanding of, and systems in place for their key operational risks, many remain unprepared for (or worse, unaware of) the financial pressures and loss of reputation that a serious legal risk can produce.