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, and in most cases cost effective, source is from another party merchant account doctor.
A high risk processing account is required by businesses that, when compared together with ‘traditional’ goods/services business, have a a higher risk of:
High quantity 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 won’t accept merchants from certain countries.
The Product/Service the merchant sells is prohibited in some jurisdictions.
Merchant Credit history – Some providers will not accept merchants with poor or no credit account.
Due for the high risk classification, most banks won’t provide an account provider to those involved with a perilous industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). As such some other providers offer their services to both general merchants and heavy risk merchants.
Merchant account providers that happen to be developed to service perilous merchants will generally provide a higher level of fraud protection, with a purpose to decrease charge their merchants incur. However, in order to cover the advanced level 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 many factors take under 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. You will need to adopt fraud protection, customer service and reporting available for as a merchant.