Services – Getting Started & Next Steps

How High-Risk Merchant Accounts Operate

There are two major categories of credit cards, high-risk credit cards and low-risk credit cards. Among these credit card processors, most of them prefer transacting businesses with low-risk merchants as they consider them to be safer as compared to their high-risk counterparts.

Businesses with excessive chargebacks automatically falls under the category of high-risk businesses. Any new merchants with short credit history are also considered as high risk by the credit card processors. Merchants who accept recurring payments also fall under the category of high-risk merchants. A merchant is also considered to be high risk in cases where his or her business tends to operate or sell goods at high risk of fraud regions. Merchants dealing with more than on currencies also fall under the high-risk category and are the best suit to high-risk merchants account. People with a bad credit history will also be categorized as high risk merchants. A high-risk merchant account may also be necessary for individuals with high returns and high chargebacks. Among other situations one may be considered to be a high-risk merchant include situations where one makes sporadic or seasonal sales. People with sales more than $20,000 are also considered as high risk a factor that may necessitate them to own a high-risk merchant account.

Merchant accounts may be denied to businesses considered to be high risk. Businesses such as alcohol dealer, cigarette and electronic cigarette dealer, drugs and drugs products, including prescription, dealers and tobacco dealers automatically fall under high risk businesses. High risk businesses also include the tour and travel agencies. Low risk merchant accounts may also be denied to merchants dealing with debt management, collection agencies, airlines and lodging businesses. In most cases, payday loans, and gambling agencies will also have to acquire a high-risk merchant account. Foreign exchange, e-wallets, dating and escort services, pyramid selling, holiday clubs, adult entertainment, charities, tech support, jewelry, insurance, online auctions and advertising services are yet another category of businesses that fall under the category of high-risk businesses and hence denied the merchant account in most cases. A high-risk merchant account may also be necessary for software dealership, penny auctions, affiliate marketing, monthly membership and subscription among other high-risk businesses.

Among the pros of a high risk merchant account, it will allow processing of card not present transactions. A high-risk merchant account may also be a necessity to businesses with sales more than $20,000. Another advantage of a high-risk merchant account is that it accepts credit cards transactions in excess of $500 each. High risk merchants do not have to worry where and who they sell their products to as their accounts do not limit them.

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