High Risk Credit Card Processing: High-Risk Merchant Account Complete Information

What Is a High-Risk Merchant Account?

High Risk Credit Card Processing processing is a payment processing option with payment processing companies which provide payment processing facility to the business which seem to be A high-risk merchant accounts means that the payment processor has put your business as being at greater chance of being a victim of fraud or chargebacks. High-risk merchant accounts have more processing fees to make up for the risk that the payment processor has taken on. 

A payment processor classifies an account with a high risk rating if they’ve found that your business’s account is more at risk in terms of fraud, chargebacks, or high volumes of returns. There are a variety of reasons why this might be the case. For instance, if you’re a new business who has never processed payments or because your business is considered to be risky and has a high risk of being a victim of fraud (e.g. or products that are controversial) such as. High-risk merchant accounts have more processing fees to compensate for the risk.

High-Risk Means Higher Fees

Each credit card processing system differs, however high-risk merchant accounts are more expensive all over all platforms. The processing costs for all transactions will be greater often more than those of merchant accounts with low risk. Even though low-risk merchants also paying a chargeback cost (a cost you pay when a customer contests the charge directly through the credit card they use) However, high-risk merchants usually have higher chargeback charges.

Reasons a Merchant May Be Considered High-Risk

A business with a high risk could be required to commit to longer contract conditions, or pay an early termination fee , or an annual or monthly fee. Merchant accounts that are high-risk may receive a roll-over reserve which means that the processor will hold the appropriate percentage of your earnings until it is able to confirm that your transactions are not fraudulent or in danger of chargeback.

There are numerous reasons why that a payment processing service could label you high-risk and although some of them may appear simple, others are complicated. Each provider has its own list of high-risk merchant accounts. However, in general, this is how you should expect to be treated. to be categorized as high-risk:

• High volume of transactions. Merchants may be classified as high-risk if they carry significant volumes of transactions, or an average rate of transaction. If a business processes more than $20,000 worth of transactions per month or has an average transaction value of $500 or greater, then they might be categories’ as a as high risk merchants.
• Accepting international payment. If a merchant sells its products to international customers in countries classified as having high-risk of fraud, it could be considered high risk (any country, with the exception of those in the U.S., Canada, Japan, Australia or the countries of Europe).
• The merchant is new. If a merchant has not previously processed transactions or has only a brief experience in processing transactions, they could be considered to be high-risk due to the fact that they don’t have an established past record.
• High-risk business. While a merchant might have an impeccable track record however, they could be labeled high-risk due to the field they work in is thought to be more susceptible to risk of fraud, return or chargebacks. For example, subscription-based businesses are categorized as high-risk because lots of users sign up to trial services and fail to cancel their subscriptions. If they review their accounts and notice the unpaid charges, they usually take the money back.
• Credit score low. If the merchant has low credit scores and is considered to be high-risk.

Types of Businesses Considered High-Risk

It is helpful to be aware prior to time if your field is considered high risk to be able to plan according to the risk. The businesses that fall in this category are:

• Adult content industry
• ISP and hosting services
• Travel, such as cruises, flights, and holiday planners
• Electronic and furniture stores as well as electronic
• Online dating
• E-commerce
• Multilevel Marketing (MLM)
• Subscription services and businesses with the option of recurring payments
• Collection of debt
• Regulated Forex
• Regulated online casinos & Gambling
• Health and wellness products
• Nutraceuticals
• Dating
• ISP and hosting services
• Credit repair
• Money Transfer
• Banned / illegal goods and services
• E-cigarettes, CBD and vape shops

High-Risk Merchant Account vs. Low-Risk Merchant Account

There are some common traits that make a business at a low risk for an payment processor. Merchants with low risk typically:

• Volume of transactions that are low (less then $20,000 per month)
• Average transactions less than $500
• The business in one country is classified as at risks (the U.S., Canada, Japan, Australia and the countries of Europe)
• One currency
• Very low or no chargebacks, and a very low percent of returns
• Industries labeled low-risk

Remember that your risk level may change as your business grows. For instance, if your business experience a rapid time in growth and expansion, the company could begin to view your business as high-risk. If you expand your business to different countries or shift sectors, a processor could consider this to be an increase in risk. If this occurs the processor you use may modify your status or be able to remove you as a customer when they don’t accept high-risk merchants in which case you’ll have to choose an alternative provider to process your payments.

How Do I Get a High-Risk Merchant Account?

If you are applying an account with a retailer you’ll need to submit the necessary tax and business documents. Once your application is approved, the payment company will decide if you’re an extremely risky or low risk merchant, and adjust their strategy accordingly.

Certain payment processors are better suitable for clients with high risk It’s a good idea to investigate different providers and choose the one that best matches your needs as a business. Some of the top high-risk merchant accounts service providers for you to consider in india High Risk Merchant Account India

Before deciding on the right payment processor, you’ll need to study the contract thoroughly each banking institution and payment processing system differs and comes with different conditions for the merchants they classify as high risk.

Frequently Asked Questions (FAQs)