Merchant accounts are needed in order for a business to accept credit card payments. As a merchant, there are two places you can obtain a merchant account; a bank, or a third party provider. For online merchants the most popular, and in most cases cost effective, source is from a third party merchant account offerer.
A high risk merchant credit card is required by businesses that, when compared with ‘traditional’ goods/services business, have reached a higher risk of:
Bankruptcy
Fraudulent Transactions
High volume of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized as a high risk are:
Merchants Location – Some merchant account providers will not accept merchants from certain countries.
The Product/Service the merchant sells is illegal in some jurisdictions.
Merchant Credit history – Some providers will not accept merchants with poor or no credit foundation.
Due towards high risk classification, most banks won’t provide your free account to people in a perilous industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some vacation providers offer their services to both general merchants and heavy risk merchants.
Merchant account providers which developed to service perilous merchants will most likely provide to the next stage of fraud protection, so as to decrease might their merchants incur. However, in order to cover the level up of risk, rates for just about any high risk merchant account will continually be higher than their lower risk counter-parts.
When hoping for a high risk merchant account, there exist several factors to be able to take note. Rates will be one very sound factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. Then you will need to adopt fraud protection, customer service and reporting available for as a merchant.
