ARE YOU A HIGH RISK MERCHANT AND IF YOU ARE, HOW DO YOU GET A HIGH RISK MERCHANT ACCOUNT?
Recently, I read an article about a merchant who lost his non-refundable application fee only to find out that his application for a merchant account was rejected for he was considered a high-risk merchant.
Do you know if you are a high risk merchant? If you are, you will have trouble getting merchant accounts from many providers. Banks would probably reject you straightaway as they are not as equipped to handle risks as merchant account providers are. Merchant account providers have departments solely dedicated to handle cases of frauds or chargebacks. However, not all merchant account providers will accept you with open arms either. They will have to access your application and financial standing before providing you, not with an ordinary merchant account but a high risk merchant account.
Who Are Considered To Be High Risk?
High Risk Business
Some businesses are considered to be riskier due to the nature of products or services that they offer. Following are a few examples:
- Infomercials
- Dating, escort and massage services
- Online gambling
- Porn videos and pictures
- Home businesses
- New businesses
- Travel agencies
- Second hand cars, computers, etc
They are considered riskier because of a variety of reasons such as the consumers refusing to pay up or demanding a refund / chargeback. The low morality associated with some of these products or services also tend to point towards the low moral values of the consumers. Hence, the chances of credit card frauds being committed are also higher. Merchant account providers are taking on the high risk of losing money if they provide such business owners with merchant accounts.
Problematic History with Merchant Accounts
You will also be considered a risky venture by merchant account providers if you have had a high number of chargebacks previously, even if your business isn’t considered risky. You will also be seen as a risk if you have had problems with making your payments to your previous merchant account provider.
Nature Of High Risk Merchant Accounts
High risk merchant accounts are unfortunately more costly. Their fees and rates are usually substantially higher than ordinary merchant accounts. This is usually the case to protect the interests of the merchant account providers. They may also freeze your accounts or hold back a substantial sum of money in case you can’t make your payments.
Tips To Getting & Managing Your High Risk Merchant Account
RESEARCH! This has to be your mantra to getting that perfect high risk merchant account. Read the terms and policies of the providers carefully. Compare costs, policies, customer support and incentives.
There are also other things you can do or learn in order to make both the processes of getting as well as supervising your merchant account more manageable.
There’s Hope
Do not despair if you have been turned down by merchant account providers. Do your research well. There are merchant account providers who are willing to help high risk merchants. You may also consider opting for third party merchant accounts. However, always ensure that you’ve done your background check on the provider before you sign any contracts with them.
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