Merchant accounts are required 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, so in most cases cost effective, source is from another party merchant account provider.
A high risk processing account is required by businesses that, when compared with ‘traditional’ goods/services business, close to 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 to be a high risk are:
Merchants Location – Some merchant account providers will not accept merchants from certain countries.
The Product/Service the merchant sells is prohibited in some jurisdictions.
Merchant Credit file – Some providers will not accept merchants with poor or no credit account.
Due to the high risk classification, most banks won’t provide an account provider to those in a high-risk industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some third party providers offer their services to both general merchants and heavy risk merchants.
Merchant account providers that happen to be developed to service high risk merchants will normally provide to the next stage of fraud protection, you will find that decrease might their merchants incur. However, in order to cover the advanced of risk, rates for just about any high risk merchant account will continually be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there exist several factors to be able to take into mind. Rates will be one of the most important factors, like includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You’ll need to think about fraud protection, customer service and reporting available a person as a merchant.