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High-Risk Merchant Account: What You Need to Know
Digital payments are making waves, while cash usage continues its downward trend in today’s fast-paced…
Read More >>Businesses that sell kratom often face major hurdles in accepting credit card payments. Or even worse, their credit card processing will freeze funds or drop their account with little notice.
Worst case, the high processing costs make it unprofitable to sell kratom. And your business misses out on a viable revenue stream.
But here’s the good news. There are options for kratom sellers. You need to look for a company that specializes in kratom credit card processing. Typically referred to as a high-risk processor, this type of payments partner can help you secure better rates and avoid frozen funds.
In this guide, we’ll cover the basics of kratom credit card processing and explain your options. Read to the end for exclusive tips and strategies on securing better credit card processing rates for your kratom business.
What Is High-Risk Kratom Payment Processing?
High-risk payment processors cater to businesses that financial institutions consider high-risk. This often includes industries like kratom, which face regulatory scrutiny, higher chargeback rates, and other risks. These businesses may also have difficulty securing traditional payment processing solutions due to their higher risk profiles.
Here are some characteristics of high-risk accounts:
- Industry: Businesses in high-risk industries like gambling, adult products, or travel are often labeled as high-risk.
- Chargeback Ratio: A history of frequent customer disputes or chargebacks can increase your risk profile.
- Financial History: Poor credit scores, limited financial history, or bankruptcy filings can make a business high-risk.
- Business Model: High volumes of card-not-present transactions (CNP) or recurring billing models are seen as riskier due to potential fraud.
- Security Practices: Inadequate data security measures or outdated technology can make businesses more vulnerable to breaches and fraud.
Kratom Payment Gateway vs. Payment Processor
A payment gateway is a service that authorizes and processes payments for online and retail transactions. In contrast, a payment processor manages the transactions between the merchant and the customer’s bank.
Typically, online kratom retailers will need both a payment gateway and a payment processor to handle transactions seamlessly. Brick-and-mortar stores may only require a payment processor.
FTx POS provides both payment processing and payment gateways for kratom retailers, ensuring you have a one-stop solution for all your payment processing needs.
Why Do I Need a Kratom Payment Processor?
Kratom retail stores need specialized credit card processing due to the high-risk nature of the product. Unlike traditional credit card processing, high-risk processors understand the unique challenges associated with selling kratom and offer features geared towards mitigating these risks.
How This Processing Is Different
- Tailored Services: Custom solutions designed to handle high-risk transactions.
- Enhanced Security: Greater emphasis on compliance and security measures.
- Better Terms: Flexible terms to accommodate the unique needs of kratom retailers.
Do You Need a Kratom Merchant Account?
A merchant account is a type of bank account that allows businesses to accept credit card payments. While some high-risk processors don’t require you to have a separate merchant account, having one can provide additional security and control over your funds.
Why Traditional Processors Don’t Get It
Traditional processors often don’t understand the unique needs of high-risk industries like kratom retail. They may drop you without notice or tie up your funds for vague compliance reasons.
Reasons to Avoid Traditional Processors:
- Unpredictable Service: They can terminate your account without any warning.
- Funds Lockup: Your funds might be frozen for long periods.
- High Fees: The fees are so high, they make it hard to earn a profit.
- Lack of Understanding: They don’t understand high-risk industries well, causing frequent service disruptions.
Sell with Confidence! FTx POS offers integrated payment processing for kratom. We will meet – or beat – your current card processing rates. Request a quote now.
What to Expect with High-Risk Kratom Payment Processing
Working with a high-risk payment processor brings several differences compared to traditional processing.
Key Differences:
- Higher Transaction Fees: Fees are generally higher due to the perceived risk of the business. High-risk merchants often face industries with higher chargeback rates and potential fraud.
- Reserve Accounts: Payment processors might require a reserve account to cover potential chargebacks and refunds. This reserve serves as a financial buffer and can be a percentage of each transaction or a fixed amount.
- Payout Cycles: Payouts to merchants may be less frequent compared to low-risk businesses. High-risk merchants might receive weekly or even monthly payouts, depending on the processor’s policies.
- Strict Underwriting: The application process involves thorough vetting and scrutiny. This can include detailed reviews of the business model, financial history, and personal credit scores of the business owners.
- Higher Chargeback Rates: There’s a higher chance of payment disputes and chargebacks. High-risk businesses often operate in sectors where customers are more likely to dispute charges, leading to higher chargeback rates.
My Credit Card Company Won’t Process Kratom Payments
If your current processor refuses to handle kratom payments, your funds could be locked, making it difficult to retrieve them.
This can cause stress and uncertainty as accessing your money becomes a challenge.
That’s why it’s important to find a specialized, high-risk processor. These processors are experienced with kratom payment transactions and can offer the security and reliability needed to ensure your payments are processed smoothly without the risk of funds being frozen.
How to Get Lower Kratom Credit Card Processing Rates
While high-risk processing rates are generally higher due to the increased potential for fraud and chargebacks, they are negotiable.
Traditional Retail Processing Rates:
- Range from 1.5% to 3.5% per transaction.
High-Risk Processing Rates:
- Generally higher due to the increased potential for fraud and chargebacks.
- Typically 0.5% to 1% higher than low-risk rates.
- Can range from 3.49% to 3.95% per transaction.
Here’s how you can secure better kratom credit card processing rates:
- Negotiate: Don’t accept the first offer. Always negotiate for better terms, like lower fees, flexible contracts, or extra services at no additional cost.
- Shop Around: Compare different payment processors to find the best rates and services. Read reviews and get recommendations to pick a reliable provider.
- Maintain a Track Record of Success: Keep low chargeback rates and offer easy return policies to improve your negotiation position. A good track record shows reliability and lowers perceived risk.
- Improve Compliance: Follow industry standards and regulations to lower your risk profile. Regularly update security measures and comply with relevant laws to avoid penalties and get better terms.
- Show Strong Financials: Show financial stability with consistent revenue growth and solid cash flow. Provide accurate financial statements, and be ready to discuss your financial health in detail.
Want a better rate? Schedule a call now for a free card processing quote. We specialize in high-risk retail. Let us help you keep more of your profits.
About Kratom Merchant Processing with FTx POS
FTx POS offers comprehensive services tailored for kratom retailers. Whether you need POS-integrated card processing or third-party processing, we’ve got you covered!
Benefits of Working with FTx POS:
- Better Rates: Competitive pricing to help you maximize profits.
- Fast Payout Cycles: Quick access to your funds.
- Rate Match (or Beat) Guarantee: We’ll match or beat your current rates.
- Chargeback Protections: Strong systems to manage and reduce chargebacks.
- Ecommerce Integration: Seamless integration for in-store pickup or delivery.
Ready to explore FTx Card Payments for kratom credit card processing? Reach out to us today to schedule a consultation and experience a demo!
FAQs
Using a regular merchant account for kratom sales is not recommended.
Due to the high-risk nature of kratom, many traditional payment processors may decline your business or impose stringent conditions. It's best to work with a specialized payment processor familiar with kratom retailers' needs.
These processors understand the regulatory challenges and market dynamics of kratom sales, offering tailored solutions for smooth and secure transactions. This can help you avoid disruptions and maintain stable payment processing for your business.
Kratom is considered high-risk due to several factors: its legal and regulatory status and potential for chargebacks.
The legal situation around kratom is complicated and varies by country and state, creating uncertainty for businesses. Chargebacks are more likely because of disputed transactions and the product's controversial nature.
Yes, because kratom businesses are considered high-risk, extra fees may apply for transaction processing.
These fees help cover the increased risk and possible regulatory compliance costs involved. Therefore, businesses should expect potentially higher operational expenses.
Yes, there are alternative methods to accept payments, such as e-checks, ACH transfers, and cryptocurrency.
However, these may not be as widely accepted or convenient for customers. It is important to research and compare different payment options to find the best fit for your business needs.
Chargebacks are a common issue for high-risk businesses like kratom retailers.
To reduce chargebacks, it's important to have clear and transparent refund and return policies. This helps customers understand the process and reduces the chances of disputes with their banks.
Additionally, keeping accurate records and offering excellent customer service can help prevent chargebacks. Teaming up with a payment processor that provides strong chargeback protections is also beneficial for reducing losses from disputed transactions.
