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 a 3rd party merchant account issuer.
A high risk merchant card account is required by businesses that, when compared into a ‘traditional’ goods/services business, have reached a higher risk of:
High quantity of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized for a high risk are:
Merchants Location – Some merchant account providers won’t accept merchants from certain countries.
The Product/Service the merchant sells is illegitimate in some jurisdictions.
Merchant Credit file – Some providers will not accept merchants with poor or no credit track record.
Due towards the high risk classification, most banks will not provide a forex account to those who are in a riskly industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). As such some other providers offer their services to both general merchants and high-risk merchants.
Merchant account providers which developed to service high risk merchants will normally provide to the next stage of fraud protection, so as to decrease charge their merchants incur. However, in order to cover the advanced of risk, rates with a high risk merchant account will always be higher than their lower risk counter-parts.
When hunting for a high risk merchant account, there exist several factors that you should take note. Rates will be one of the most important factors, as well as 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 a person as a merchant.