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 another party merchant account doctor.
A high risk merchant card account is required by businesses that, when compared with ‘traditional’ goods/services business, have reached a higher risk of:
High volume 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 file – Some providers will not accept merchants with poor or no credit foundation.
Due to the high risk classification, most banks will not provide an account provider to those invoved with a danger industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some third party providers offer their services to both general merchants and high risk merchants.
Merchant account providers that have been developed to service high-risk merchants will most likely provide the next stage of fraud protection, with a purpose to decrease expense of their merchants incur. However, in order to cover the advanced of risk, rates for virtually any 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 that you should take into account. Rates will be one of the most basic factors, and this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You’ll need to think about fraud protection, customer service and reporting available to you as a merchant.