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 another party merchant account offerer.
A high risk merchant credit card is required by businesses that, when compared along with ‘traditional’ goods/services business, was at 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 will not accept merchants from certain countries.
The Product/Service the merchant sells is illegal in some jurisdictions.
Merchant Credit file – Some providers won’t accept merchants with poor or no credit foundation.
Due for the high risk classification, most banks will not provide an account provider to those in a riskly industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Therefore some third party providers offer their services to both general merchants and precarious merchants.
Merchant account providers that are developed to service perilous merchants will generally provide to the next stage of fraud protection, you will notice that decrease charge their merchants incur. However, in order to cover the advanced level of risk, rates for a high risk merchant account will possibly be higher than their lower risk counter-parts.
When purchasing a high risk merchant account, there are a number of factors take into consideration. Rates will be one of the most basic factors, refund policy 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 to you as a merchant.