High-Risk Merchant Accounts

Have you ever heard about high-risk merchant accounts? Below is information about high-risk merchant accounts that you should be aware of.

Any merchant account that takes credit card payments from clients of “high-risk” businesses (travel, pharmaceuticals, telemarketing, online gaming etc.) is considered - high-risk merchant account. Opening a high-risk merchant account is usually a challenging task, but once opened, it gives a number of benefits to its owner. If a businessperson is unable to open a merchant account with a local bank, he or she can always turn to other alternatives and open an online merchant account.

Nowadays almost any type of business, big or small, prefers setting up online merchant accounts, because of the benefits and conveniences they give to both, merchants and their customers. Unfortunately, businesses that are qualified “high-risk” cannot avail ‘ordinary’ merchant accounts through their local banks, so they need applying for ‘high-risk’ merchant accounts.

What is a high-risk merchant account?

It is a type of merchant account opened by businesses that perform high-risk transactions. These businesses get an opportunity to accept credit card payments from their customers after they acquire a high-risk merchant account. 

Types of businesses that need a high-risk merchant account

Those businesses that have high volumes of sales, high dissatisfaction rate from customers and guarantee money-back policy are considered high-risk. Below is a list of businesses belonging to this category:

• Online auctions
• Online gaming, as lotteries and casino
• Online dating
• Online mortgage or debt services
• Telemarketing
• Adult entertainment/content and toys
• Travel
• Replica sales
• Interactive games
• Home-based businesses
• Pawn Shops
• Insurance
• Automobile rentals and sales
• Multi-level marketing
• ISP or web hosting services
• Gun dealers
• Software downloads
• Telecommunications equipment sales
• Mail order / telephone order
• Computer and gadgets stores

Opening a high-risk merchant account

Finding a merchant account provider may be a challenging task for anyone owning a high-risk business. The task has become even more difficult, because most banks and other financial institutions have very strict requirements to their applicants and are careful of giving merchant account services. This is due to the high risks of frauds associated with credit cards operations.

Before giving an account, a merchant account provider looks at the period of time an applicant is engaged in the business, and also checks a chargeback history. An applicant is likely to get a merchant account if he/she has been in the business for a long time and has rare cases of chargebacks. It usually takes several weeks for a high-risk merchant account to get approved.

If compared to ordinary merchant accounts, high-risk merchant accounts charge higher interest rates for credit card processing; consequently opening a high-risk account may be a bit costly. Rates and fees vary from provider to provider. The good news about high-risk merchant counts is that applicants are not required to provide an initial security deposit in order to get an account.

Advantages of a high- risk merchant account

By opening a high-risk merchant account, a business owner gets an opportunity to accept almost all types of credit cards from customers. Other advantages include: multicurrency transactions, real-time credit card processing and 24/7 customer support service.

Alternative for a high-risk merchant account

If a business owner is not able to open a high-risk merchant account with any local bank or other account provider it is always possible to opt for a third party card processor or an online high-risk merchant account.