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, plus most cases cost effective, source is from one third party merchant account issuer.
A high risk merchant account is required by businesses that, when compared into a ‘traditional’ goods/services business, are at 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 record – Some providers will not accept merchants with poor or no credit history.
Due towards the high risk classification, most banks will not provide your free account to those involved with a perilous industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). Therefore some outside providers offer their services to both general merchants and precarious merchants.
Merchant account providers that have been developed to service precarious merchants will probably provide the next step of fraud protection, so as to decrease the price of their merchants incur. However, in order to cover the more fantastic range of risk, rates high risk merchant account will always be higher than their lower risk counter-parts.
When looking for high risk merchant account, there are a number of factors that you should take into account. Rates will be one of the most important factors, and this 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.