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, with the most cases cost effective, source is from a third party merchant account organization.
A high risk processing account is required by businesses that, when compared together with ‘traditional’ goods/services business, have reached a higher risk of:
Bankruptcy
Fraudulent Transactions
High quantity of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized for 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 report – Some providers won’t accept merchants with poor or no credit foundation.
Due towards high risk classification, most banks won’t provide a merchant account to those who are in a high risk industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). Consequently some outside providers offer their services to both general merchants and high-risk merchants.
Merchant account providers of developed to service precarious merchants will generally provide to the next stage of fraud protection, so that you can decrease expense of their merchants incur. However, in order to cover the advanced of risk, rates high risk merchant account will continually be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are many factors that you should take into account. Rates will be one of the most important factors, and this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You will need to adopt fraud protection, customer service and reporting available for as a merchant.