Facts About High Risk Merchant Accounts

A high risk merchant account is a type of merchant account that accepts credit card payments from customers of a ‘high risk’ business such as online gaming, pharmaceuticals, travel, telemarketing and the likes. setting up a high risk merchant account may be hard but it surely has many advantages to the business.If a retailer can't aquire a high risk merchant account from his local bank, he can try other alternatives such as setting up an 'online' merchant account instead.

Almost any type of business now choose to acquire a merchant account because of its many benefits to the business and the added convenience to both the merchant and the customers. But not all businesses can avail an ‘ordinary’ merchant account through their local banks for the reason that they may are qualified as a high risk, thus, what they need is a ‘high risk’ merchant account.

What is a high risk merchant account?

A high risk merchant account is a type of merchant account that is specifically for businesses that are highly associated in high risk dealings. Once these types of businesses get a high risk merchant account, they would be able to accept credit card payments from their customers.

Kinds of businesses that need a high risk merchant account

High risk businesses are those that have high volumes of sales or chargebacks, with a money-back guarantee policy or high dissatisfaction rate from customers. Below are specific businesses that fall in this category:

* Online gaming like casinos or lotteries
* Online dating
* Travel
* Adult entertainment/content and toys
* Online auctions
* Online mortgage or debt services
* Online gambling or casinos
* Telemarketing
* Cigarettes and tobacco vending
* Interactive games
* ISP or web hosting services
* Nutraceuticals or pharmaceuticals
* Replica sales
* Automobile rentals and sales
* Telecommunications equipment sales
* Multi-level marketing
* Insurance
* Home-based businesses
* Gun dealers
* Pawn Shops
* Computer and gadgets stores
* Software downloads
* Mail order / telephone order

Setting up a high risk merchant account

High risk businesses may have a hard time finding a merchant account provider for their business’ credit card processing needs. That is because most banks or other financial institutions are now careful of giving merchant services to businesses. This is due to the high risks of frauds from credit cards or other problems that involve in high risk deals.

Merchant account providers may have to look at the length of time the applicant is engaging in the business, including his chargeback history. If an applicant has very low chargebacks and has been in the business for a long time, the provider would likely give the applicant  a merchant account. It will also take several weeks for a high risk merchant account to be approved.

Setting up a high risk merchant account may be a bit costly than an ordinary merchant account simply because it has higher rates in credit card processing.  Rates or fees vary though from one provider to another.  The good part is that high risk merchant account providers don’t require their applicants to give an initial security deposit for their accounts.

Advantages of a high risk merchant account

Benefits of a high risk merchant account include acceptance of almost all types of major credit cards from customers, a 24/7 customer support, real-time credit card processing, multicurrency transactions, and the holder may have some chances for tax benefits.

Alternative for a high risk merchant account

If a retailer would not be able to acquire high risk merchant account in any domestic bank or account provider, the vendor may have to opt for a an ‘online’ high risk merchant account or a third party card processor.