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, with the most cases cost effective, source is from a 3rd party merchant account issuer.
A high risk merchant account is required by businesses that, when compared with ‘traditional’ goods/services business, was at a higher risk of:
High quantity 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 will not accept merchants from certain countries.
The Product/Service the merchant sells is illegitimate in some jurisdictions.
Merchant Credit history – Some providers won’t accept merchants with poor or no credit history.
Due to the high risk classification, most banks will not provide your free account to those who are in a riskly industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). As such some vendor providers offer their services to both general merchants and heavy risk merchants.
Merchant account providers that happen to be developed to service high risk merchants will normally provide the next step of fraud protection, you will find that decrease the price of their merchants incur. However, in order to cover the more fantastic range of risk, rates with a high risk merchant account will possibly be higher than their lower risk counter-parts.
When purchasing a high risk merchant account, there many factors to be take into mind. Rates will be one of the biggest factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. Then you will need to adopt fraud protection, customer service and reporting available to you as a merchant.