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, with the most cases cost effective, source is from another party merchant account provider.
A high risk merchant card account is required by businesses that, when compared into a ‘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 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 prohibited in some jurisdictions.
Merchant Credit file – Some providers won’t accept merchants with poor or no credit account.
Due into the high risk classification, most banks won’t provide a merchant account to those invoved with a danger industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Because of this some vacation providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers of developed to service perilous merchants will most likely provide to the next stage of fraud protection, you will find that decrease charge their merchants incur. However, in order to cover the advanced of risk, rates for just about any high risk merchant account will be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are a number of factors take into consideration. Rates will be one very sound factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. You will need to take into account fraud protection, customer service and reporting available to you as a merchant.