What is high risk merchant account highriskpay.com: Businesses not approved for low-risk merchant accounts can use high-risk payment processors for credit card processing. The ability to accept credit and debit cards can make the difference between operating on a cash-only basis and accepting credit and debit cards.
A high-risk merchant operates in an age-restricted industry, such as tobacco, cigarettes, or drop shipping, or a highly fraudulent or chargeback-prone industry, like design.
Payment processors and merchant account providers often struggle to work with these businesses. However, these businesses can take advantage of several good options, including competitive pricing, popular integrations, and a choice of payment methods.
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How does a merchant account with high-risk work?
The payment processor will assign you the classification high-risk if they deem your account high-risk. Fraud, chargebacks, and large returns are more likely to occur if you do this. There are many possible reasons for this.
You are more likely to be targeted by fraud if you haven’t received payments in the past or if your business is considered risky. Using controversial products like this is not recommended. Processing fees for high-risk merchants are higher to protect themselves.
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What is the process for getting a high-risk merchant account?
When applying for an account, you should highlight why you should trust the business since processing payments from these merchants is risky. Application cover letters can include these details.
What Makes A High-Risk Merchant Account?
Merchant accounts at high risk may be labeled as such by payment processors for a variety of reasons. It is possible to label merchant accounts as high-risk for the following reasons:
- The merchant account may be considered high risk if it has an average transaction rate higher than the industry average or carries a high volume of transactions.
- Merchant accounts can be deemed high-risk if they are used to accept international payments from countries labeled as high-risk.
- The account of a new merchant may be labeled as high risk if the merchant has never processed payments before.
- An industry considered high-risk might also affect a merchant’s merchant account if the industry in which the merchant operates is high-risk.
- Merchants with low credit scores may be considered high-risk merchants.
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A Guide To Choosing a Reputable High-Risk Payment Processor
You can find a merchant account that will accept your business and meet your needs if you have been identified as a high-risk merchant or if you suspect you may be one:
- Examining the types of businesses the processor works for is important. Even high-risk specialists cannot always work with every type of business.
- A load-balancing processor will let you spread your transactions across multiple merchants whose payment gateways are integrated.
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- The rates and fees charged by high-risk merchant account providers can vary depending on the bank or processor that underwrites your account, as most work with multiple processors. Read your contract carefully before signing your account.
- To make the right decision, we recommend you get quotes from at least three providers before selecting one. Prices vary among providers, so you should get multiple quotes before selecting one.
Businesses with a high risk of fraud or chargebacks are usually eligible for high-risk merchant accounts. Payment transactions for these merchants are more complicated, so they pay more for processing.