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, in addition as in most cases cost effective, source is from an additional party merchant account offerer.
A high risk merchant credit card is required by businesses that, when compared together with ‘traditional’ goods/services business, are at a higher risk of:
High sum of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized for a high risk are:
Merchants Location – Some merchant account providers won’t accept merchants from certain countries.
The Product/Service the merchant sells is illegal in some jurisdictions.
Merchant Credit history – Some providers will not accept merchants with poor or no credit account.
Due into the high risk classification, most banks won’t 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 outside providers offer their services to both general merchants and heavy risk merchants.
Merchant account providers that are developed to service high risk merchants will generally provide to the next stage of fraud protection, you will notice that decrease the cost their merchants incur. However, in order to cover the higher level of risk, rates for just about any high risk merchant account will be higher than their lower risk counter-parts.
When looking for high risk merchant account, there are a number of factors to be take into account. 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 contemplate fraud protection, customer service and reporting available a person as a merchant.