Merchant accounts are required 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 3rd party merchant account issuer.
A high risk merchant card account is required by businesses that, when compared along with ‘traditional’ goods/services business, was at a higher risk of:
Bankruptcy
Fraudulent Transactions
High volume 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 unlawful in some jurisdictions.
Merchant Credit report – Some providers won’t accept merchants with poor or no credit foundation.
Due to the high risk classification, most banks won’t provide your free account to those who are in a high risk pharmacy merchant account-risk industry (such as adult entertainment, replica goods, pharmacy etc). Consequently some vendor 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 normally provide the next stage of fraud protection, you will notice that decrease charge their merchants incur. However, in order to cover the more fantastic range of risk, rates with a high risk merchant account will be higher than their lower risk counter-parts.
When looking for a high risk merchant account, there are several factors that you should take note. Rates will be one very sound factors, refund policy includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. Require need to think about fraud protection, customer service and reporting available to you as a merchant.