High Risk Merchant Account Services are accounts available to ‘high risk’ businesses, often described as “merchant accounts for high risk businesses”. Any business that is considered a ‘high risk’ merchant will be subject to additional scrutiny by traditional merchant account providers. These companies may also be referred to as ‘gateway aggregators’.
High Risk Merchant accounts often attract a much higher rate of fraud and chargeback activity – there are many reasons for this, but a large part can be attributed to the type of products or services being sold. Since High Risk Merchants earn a living from selling very high risk products it makes sense that they will have a higher percentage of fraudsters amongst their customer base.
Some High Risk Merchants might be selling products such as medicines, adult entertainment, infidelity services or any other product or service that has a high potential for chargeback. It is important to note that not all ‘high risk’ businesses are automatically considered High Risk Merchants. The following types of business are usually considered “High Risk” merchants: payday loans / cash advances, pornography, virtual currency exchanges and travel related transactions.
High Risk Merchant Account providers usually have a specific set of criteria that any business must meet prior to being considered for an account with their company. This can vary from provider to provider, but some examples may be: having a minimum number of years in business or requiring a certain number of transactions or volume per month.
High Risk Merchants are often turned away by traditional merchant account providers due to their high risk nature. Most online merchants are approved quickly and enjoy the benefits of a comprehensive payment processing platform. High Risk Merchants, on the other hand, have to wait in line while companies judge them based on their own subjective criteria.
Since high risk merchants are already considered a higher risk by traditional merchant providers, they often pay more for their processing services as well. This is because they have to meet certain criteria and spend a considerable amount of time submitting documentation, etc. Underwriters at traditional banks spend a good deal of time conducting due diligence with these businesses in order to identify the ones that are most likely to default.
This is because many high-risk businesses will go out of business or stop accepting card payments because they fail to keep up with the added responsibilities required when taking credit cards. These extra costs can be extremely burdensome to a new business, which leads them to make mistakes and eventually close their doors.
High Risk Merchant Account Providers are located all over the world, but there are also lots of smaller companies that act as ‘aggregators’ to these larger High Risk merchant account providers. They often charge a monthly fee for simply providing an introduction service to potential clients. The payment rates they will give you can vary greatly depending on your industry, so it is important to compare rates and consider all options before signing up.If you are looking for High Risk merchant services, the best thing you can do is shop around, get quotes from at least two or three companies that specialize in High Risk Merchant Account Services. Compare the total cost of doing business (rates & fees) on processing credit cards, check out processing equipment options & costs, and see what guarantees are offered. You should also consider how long the company has been in business to ensure that they will be around if problems arise later on.