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, and in most cases cost effective, source is from a 3rd party merchant account offerer.
A high risk processing account is required by businesses that, when compared into a ‘traditional’ goods/services business, have reached a higher risk of:
High lots of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized being a high risk are:
Merchants Location – Some merchant account providers won’t accept merchants from certain countries.
The Product/Service the merchant sells is prohibited in some jurisdictions.
Merchant Credit report – Some providers will not accept merchants with poor or no credit track record.
Due to the high risk classification, most banks won’t provide your free account to people in a high risk industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). For this reason some other providers offer their services to both general merchants and high-risk merchants.
Merchant account providers which developed to service precarious merchants will generally provide the next stage of fraud protection, so that you can decrease the price of their merchants incur. However, in order to cover the advanced of risk, rates for a high risk merchant account will definitely be higher than their lower risk counter-parts.
When hoping for a high risk merchant account, there are a number of factors if you want to take into mind. 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 ongoing fees. You must need to think about fraud protection, customer service and reporting available a person as a merchant.