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 one third party merchant account provider.
A high risk processing account 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 to be a high risk are:
Merchants Location – Some merchant account providers won’t accept merchants from certain countries.
The Product/Service the merchant sells is unlawful in some jurisdictions.
Merchant Credit history – Some providers will not accept merchants with poor or no credit history.
Due to the high risk classification, most banks will not provide an account provider to those in a perilous industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some outside providers offer their services to both general merchants and high-risk merchants.
Merchant account providers which developed to service precarious merchants will generally provide a higher level of fraud protection, with a purpose to decrease might their merchants incur. However, in order to cover the advanced of risk, rates with a high risk merchant account will possibly be higher than their lower risk counter-parts.
When looking for a high risk merchant account, there many factors to be able to take into mind. Rates will be one of the most important factors, like includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You must need to think about fraud protection, customer service and reporting available a person as a merchant.