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, and in most cases cost effective, source is from a 3rd party merchant account issuer.
A high risk processing account is required by businesses that, when compared with ‘traditional’ goods/services business, close to a higher risk of:
High amount of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized like 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 standing – Some providers won’t accept merchants with poor or no credit account.
Due to the high risk classification, most banks will not provide business relationship to those who are in a danger industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). Consequently some outside providers offer their services to both general merchants and high risk merchants.
Merchant account providers which developed to service high risk merchants will generally provide the next stage of fraud protection, with a purpose to decrease might their merchants incur. However, in order to cover the level up of risk, rates for virtually any high risk merchant account will definitely be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are many factors to be take into mind. Rates will be one very sound 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 look into fraud protection, customer service and reporting available for as a merchant.