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, plus most cases cost effective, source is from an additional party merchant account issuer.
A high risk processing account is required by businesses that, when compared with ‘traditional’ goods/services business, are at a higher risk of:
High lots of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized to be a high risk are:
Merchants Location – Some merchant account providers will not accept merchants from certain countries.
The Product/Service the offshore merchant account for pharmacy sells is illegal in some jurisdictions.
Merchant Credit history – Some providers won’t accept merchants with poor or no credit details.
Due to the high risk classification, most banks will not provide business relationship to those who are in a high-risk industry (such as adult entertainment, replica goods, pharmacy etc). Because of this some vendor providers offer their services to both general merchants and high-risk merchants.
Merchant account providers that have been developed to service high-risk merchants will probably provide to the next stage of fraud protection, so as to decrease expense of their merchants incur. However, in order to cover the level up of risk, rates for virtually any high risk merchant account will be higher than their lower risk counter-parts.
When hoping for a high risk merchant account, there exist several factors to be take into consideration. Rates will be one of the most basic factors, like includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. Then you will need to take into account fraud protection, customer service and reporting available for as a merchant.