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 an additional party merchant account offerer.
A high risk merchant account is required by businesses that, when compared to a ‘traditional’ goods/services business, close to a higher risk of:
High lots of sales
High rate of refunds
high risk pharmacy merchant account rate of charge-backs
Other reasons a merchant may be categorized to be 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 will not accept merchants with poor or no credit foundation.
Due into the high risk classification, most banks won’t provide business relationship to those who are in a high risk industry (such as adult entertainment, replica goods, pharmacy etc). As such some other providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers that are developed to service high-risk merchants will generally provide to the next stage of fraud protection, you will find that decrease the cost their merchants incur. However, in order to cover the advanced level of risk, rates with a high risk merchant account will possibly be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there many factors to be able to take under consideration. Rates will be one of the most basic factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. You will need to think about fraud protection, customer service and reporting available for as a merchant.