With the increased level of competition within the business ecosystem, it is not that easy for many new companies to attain a strategic position in the marketplace. Most of these new businesses face huge challenges in terms of funding and marketing. Many of those that are categorized as high-risk industries experience a ton of difficulties as well.
For those who are not yet familiar with the level of risks that are used to categorize businesses, it is simply a way for financial institutions to implement a specific set of restrictions and processing fees for merchant accounts. Typically, businesses with little to no credit history or those with bad credit records fall under the high-risk category. Some companies that have good credit ratings but offer subscription-based products, computers and hardware, regulated pharmaceuticals, and other products and services are also classified as high-risk industries.
High-risk industries are tasked to deal with a lot of difficulties as they continue to run their business every day. Listed below are the top three things that you should know about the challenges faced by high-risk industries. If you are planning to set up a high-risk business, then this article can be of good help.
1. Financial Assistance
Most startup businesses face huge problems with regards to funding and sustaining regular operational costs, most especially the smaller ones. In this case, applying for financial assistance through securing a loan from a bank can be one of the best solutions that they may consider. However, high-risk companies often have to go through intensive screening processes before they get approved for different financial services. Reduced maximum loan limits and longer waiting times can definitely have a negative impact on the regular function of high-risk businesses.
2. Excessive Fees
From the startup fees to the monthly processing fees, maintaining a high-risk business is definitely not cheap compared to low and medium-risk businesses. Aside from these expensive recurring fees, high-risk businesses also shoulder huge chargeback fees which can definitely affect the number of profits that they are expected to make during a given period. If you are planning to set up a high-risk company, it is highly advised that you take all of the expenses into account.
3. Credit Card Processing
Most credit card processing companies do not provide high-risk industries access to payment processing because of the high frequency of frauds and chargebacks. However, there are some card processing companies that offer special payment processing services to high-risk businesses, verifying the authenticity of the payments and reducing the chances of chargebacks.
Cannabidiol oil or CBD oil is an example of a regulated pharmaceutical that can be purchased using a credit card. CBD Oil Credit Cards can be used by individuals to purchase this product. Most banks will turn down payment processing for CBD oil since the origin of the product, marijuana, is deemed illegal in most parts of the US. The Southern Institute offers payment processing to CBD Oil retailers, freeing them up from additional stress. Visit their website at https://thesoutherninstitute.com/cbd-oil-credit-card-processing/ to learn more.
