Merchant accounts are needed 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, in addition as in most cases cost effective, source is from another party merchant account organization.
A high risk merchant account is required by businesses that, when compared along with ‘traditional’ goods/services business, have reached a higher risk of:
High amount 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 against the law in some jurisdictions.
Merchant Credit report – Some providers will not accept merchants with poor or no credit account.
Due into the high risk classification, most banks will not provide a merchant account to those involved with a riskly industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some vacation providers offer their services to both general merchants and high risk merchants.
Merchant account providers that have been developed to service precarious merchants will normally provide the next stage of fraud protection, so as to decrease the cost their merchants incur. However, in order to cover the level up of risk, rates for virtually any high risk merchant account will possibly be higher than their lower risk counter-parts.
When looking for high risk merchant account, there are several factors that you should take into mind. Rates will be one very sound factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. Then you will need to look into fraud protection, customer service and reporting available you as a merchant.