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 an additional party merchant account offerer.
A high risk merchant account is required by businesses that, when compared along with ‘traditional’ goods/services business, are at a higher risk of:
Bankruptcy
Fraudulent Transactions
High lots 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 account for online pharmacy sells is prohibited in some jurisdictions.
Merchant Credit file – Some providers won’t accept merchants with poor or no credit details.
Due for the high risk classification, most banks will not provide an account provider to those invoved with a perilous industry (such as adult entertainment, replica goods, pharmacy etc). Because of this some vendor providers offer their services to both general merchants and high-risk merchants.
Merchant account providers that are developed to service precarious merchants will probably provide to the next stage of fraud protection, so as to decrease might their merchants incur. However, in order to cover the advanced of risk, rates high risk merchant account will be higher than their lower risk counter-parts.
When hoping for a high risk merchant account, there exist several factors to be able to take note. Rates will be one of the biggest factors, this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and ongoing fees. You’ll need to think about fraud protection, customer service and reporting available a person as a merchant.