Generally a local, a domestic and land-based or online business can get a merchant account without much effort but companies with high risk are deprived of a merchant account by the domestic account processors. These companies are predominantly online businesses and are specified as high-risk companies due to reasons like huge turnover resulting in fraudulent transactions. The banks regard an account a high-risk merchant account if the company has a lot of chargebacks, high income, legal issues related to marketing, the legal problems the bank or processor may face for getting the process done for the merchant.
The following businesses need a high-risk merchant account:
· Unregistered companies
· Businesses blacklisted (usually if criminally charged by law)
· Credit history not very sound
· Companies which operate a business on the internet like travel, online pharmacy, telemarketing, entertainment, ticketing to name a few
· High volumes of sales due to which there is a lot of transactions making it susceptible to fraud
· Very low volumes and less transaction which make the business unable to pay the heavy expenditure incurred due to fraud or pay for the expensive software to keep away frauds
Obtaining one helps in easy and faster processing of credit cards online for getting payments. If the risk is very high it is better to opt for an international or offshore high-risk merchant account which is easily available through merchant account processors. It is much more pricy than a regular merchant account owing to its high fees and charges which includes a heavy setup fee. In spite of earning a lot of money, high-risk merchants face a lot of problems in getting money online as they do not have a merchant account. Because of these reasons, high-risk merchant accounts have been set up.
Similarly, credit card processing rates are also higher for high-risk merchant accounts. These high charges are due to the risks taken by the account providers in accepting the accounts as well as they are not there to help with the domestic account providers. In case a businessman is not being able to get a high-risk merchant account then he can opt for a third party which will manage the high-risk merchant account on the behalf of the businessman.
So if you are thinking of enjoying the benefits of high-risk merchant bank account consider the pros and cons of all the points discussed here and then go for it so that you are fully prepared for the consequences later.