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 a third party merchant account issuer.
A high risk merchant card account is required by businesses that, when compared together with ‘traditional’ goods/services business, close to a higher risk of:
High quantity 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 will not accept merchants from certain countries.
The Product/Service the merchant sells is against the law in some jurisdictions.
Merchant Credit file – Some providers will not accept merchants with poor or no credit foundation.
Due towards high risk classification, most banks will not provide a forex account to those involved with a perilous industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). For this reason some third party providers offer their services to both general merchants and heavy chance merchants.
Merchant account providers that have been developed to service high-risk merchants will most likely provide to the next stage of fraud protection, you will notice that decrease the cost their merchants incur. However, in order to cover the advanced level of risk, rates high risk merchant account will always be higher than their lower risk counter-parts.
When looking for a high risk merchant account, there many factors to be able to take into consideration. Rates will be one of the most important factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. Then you will need to adopt fraud protection, customer service and reporting available you as a merchant.