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, in addition as in most cases cost effective, source is from an additional party merchant account offerer.
A high risk credit card merchant account is required by businesses that, when compared along with ‘traditional’ goods/services business, have reached a higher risk of:
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 won’t accept merchants from certain countries.
The Product/Service the merchant sells is illegitimate in some jurisdictions.
Merchant Credit standing – Some providers won’t accept merchants with poor or no credit history.
Due towards the high risk classification, most banks will not provide a merchant account to those invoved with a perilous industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Therefore some other providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers which developed to service precarious merchants will most likely provide the next stage of fraud protection, with a purpose to decrease the price of their merchants incur. However, in order to cover the advanced level of risk, rates with a high risk merchant account will always be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there exist several factors if you want to take under consideration. Rates will be one of the biggest factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. You will need to adopt fraud protection, customer service and reporting available a person as a merchant.