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High risk merchants
Most businesses nowadays need to be able to accept card payments, whether you're an online business or bricks and mortar. Finding a good and reliable merchant account provider to process those card transactions is still proving to be a challenge for any business, but it can be even harder if you’re a high risk merchant
What is a High Risk Merchant Account?
More and more companies are applying for a High Risk Merchant Account due to the nature of their business. Let’s look at the most common reasons why accounts can be high risk and what are the issues associated with opening this type of account.
Merchants are usually considered high risk for one of the following reasons:
- Personal credit or company financials not able to support the sales volume that you are applying for
- Your service or product has a longer chargeback liability period.
- You are in an industry that has a history of high-chargebacks. The bank feels they will spend too many resources managing your account, and eventually have to turn you off regardless if/when you exceed chargeback thresholds
- The account has a “reputational” risk, such as the adult industry
- The business has been black listed by credit card companies
- Products or services that the business sales are deemed to be prohibited by some but not all banks
- The business sells future deliverable products, like a hotel reservation, tickets to an event, etc
- Memberships with automated recurring billing
If your classed as 'High Risk',quite frankly, it makes getting a merchant account a lot harder and more expensive. Despite the intense competition within the merchant services industry, getting approved for a merchant account is never guaranteed. Providers have to balance the risk presented by a merchant applying for an account against the potential profit to be made from the account if it is approved. In most cases, they err on the conservative side of things, meaning high-risk merchants simply aren’t approved for an account.
Other providers will approve you, but you won’t get nearly as good a deal as a non-high-risk merchant would receive. Instead, you’ll pay higher processing rates (up to 15% per transaction) and account fees, and you’ll usually be stuck with a long-term contract (typically 3 years) and an early termination fee. In some cases, you might also be required to put up a rolling reserve to get approved.
If a merchant is considered high risk, they will have a more difficult time obtaining a merchant account, but We Tranxact Ltd has the experience and the relationships in place to assist you!