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 a 3rd party merchant account issuer.
A high risk merchant account is required by businesses that, when compared with ‘traditional’ goods/services business, have a a higher risk of:
High volume of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized as 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 won’t accept merchants with poor or no credit details.
Due into the high risk classification, most banks will not provide your free account to people in a perilous industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). Because of this some vendor providers offer their services to both general merchants and precarious merchants.
Merchant account providers which developed to service perilous 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 advanced of risk, rates high risk merchant account will always be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are many factors to be able to take under consideration. Rates will be one of the biggest factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. You will need to look into fraud protection, customer service and reporting available you as a merchant.