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, so in most cases cost effective, source is from a 3rd party merchant account provider.
A high risk credit card merchant account is required by businesses that, when compared together with ‘traditional’ goods/services business, close to a higher risk of:
High sum 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 into the high risk classification, most banks won’t provide an account provider to those in a high-risk industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Therefore some vacation providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers that have been developed to service high risk merchants will most likely provide to the next stage of fraud protection, you will find that decrease expense of their merchants incur. However, in order to cover the more fantastic range of risk, rates 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 that you should take into mind. Rates will be one very sound factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. You must need to take into account fraud protection, customer service and reporting available you as a merchant.