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, with the most cases cost effective, source is from another party merchant account organization.
A high risk credit card merchant account is required by businesses that, when compared together with ‘traditional’ goods/services business, have a a higher risk of:
High lots 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 against the law in some jurisdictions.
Merchant Credit file – Some providers will not accept merchants with poor or no credit history.
Due to the high risk classification, most banks won’t provide an account provider to those invoved with a riskly industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). As such some other providers offer their services to both general merchants and high-risk merchants.
Merchant account providers that are developed to service precarious merchants will probably provide a higher level of fraud protection, so that you can decrease charge their merchants incur. However, in order to cover the advanced level of risk, rates for virtually any high risk merchant account will be higher than their lower risk counter-parts.
When purchasing a high risk merchant account, there are several factors if you want to take into mind. Rates will be one of the most basic factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and ongoing fees. You’ll need to look into fraud protection, customer service and reporting available a person as a merchant.