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, so in most cases cost effective, source is from another party merchant account issuer.
A high risk merchant card 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 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 against the law in some jurisdictions.
Merchant Credit standing – Some providers will not accept merchants with poor or no credit account.
Due towards high risk classification, most banks will not provide an account provider to those involved with a high risk industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). As such some vacation providers offer their services to both general merchants and high risk merchants.
Merchant account providers that have been developed to service precarious merchants will broadly speaking provide a higher level of fraud protection, you will notice that decrease charge their merchants incur. However, in order to cover the level up of risk, rates high risk merchant account will definitely be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there are several factors if you want to take into consideration. Rates will be one of the most important factors, and this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and ongoing fees. You will need to look into fraud protection, customer service and reporting available you as a merchant.