Who Needs a High Risk Merchant Account?

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 provider.

A high risk processing account is required by businesses that, when compared with ‘traditional’ goods/services business, was at a higher risk of:

Bankruptcy

Fraudulent Transactions

high risk pharmacy merchant account sum 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 will not accept merchants from certain countries.

The Product/Service the merchant sells is illegal in some jurisdictions.

Merchant Credit history – Some providers won’t accept merchants with poor or no credit foundation.

Due towards high risk classification, most banks won’t provide business relationship to those in a high risk industry (such as adult entertainment, replica goods, pharmacy etc). As such some third party providers offer their services to both general merchants and heavy risk merchants.

Merchant account providers that are developed to service high-risk merchants will broadly speaking provide the next step of fraud protection, so that you can decrease expense of their merchants incur. However, in order to cover the advanced of risk, rates for virtually any high risk merchant account will possibly be higher than their lower risk counter-parts.

When hunting for a high risk merchant account, there are many factors that you should take under consideration. Rates will be one of the most basic factors, and this includes fees for refunds and charge-backs, along with transaction fees, the discount rate and continuing fees. Then you will need to take into account fraud protection, customer service and reporting available to you as a merchant.