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 one third party merchant account organization.
A high risk merchant credit card is required by businesses that, when compared along with ‘traditional’ goods/services business, was at 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 illegitimate in some jurisdictions.
Merchant Credit report – Some providers won’t accept merchants with poor or no credit foundation.
Due towards high risk classification, most banks won’t provide an account provider to those involved with a riskly industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Therefore some other providers offer their services to both general merchants and precarious merchants.
Merchant account providers which developed to service high-risk merchants will broadly speaking provide a higher level of fraud protection, so as to decrease charge their merchants incur. However, in order to cover the higher level of risk, rates for a high risk merchant account will possibly be higher than their lower risk counter-parts.
When purchasing a high risk merchant account, there are a number of factors take into account. Rates will be one of the most basic factors, as well as includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You must need to contemplate fraud protection, customer service and reporting available to you as a merchant.