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, plus most cases cost effective, source is from a 3rd party merchant account issuer.
A high risk processing account is required by businesses that, when compared into a ‘traditional’ goods/services business, was at a higher risk of:
High amount of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized like a high risk are:
Merchants Location – Some merchant account providers won’t accept merchants from certain countries.
The Product/Service the merchant sells is against the law in some jurisdictions.
Merchant Credit report – Some providers won’t accept merchants with poor or no credit account.
Due towards high risk classification, most banks will not provide your free account to those who are in a high risk industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). Because of this some third party providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers that have been developed to service perilous merchants will probably provide to the next stage of fraud protection, with a purpose to decrease expense of their merchants incur. However, in order to cover the level up of risk, rates for virtually any high risk merchant account will be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are a number of factors to be take into account. Rates will be one very sound factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You’ll need to contemplate fraud protection, customer service and reporting available a person as a merchant.