What is a high risk merchant?

When it comes to credit card processing, the companies that provide merchant accounts consider some merchants “riskier” than others. These companies may be unwilling to do business with merchants they consider high risk, or will only do so via very strict terms and high fees. What makes a business risky in the eyes of these companies? There are a number of factors involved, and while a poor credit rating and credit score may automatically qualify your business as “high risk,” this is not the only reason a provider may decline to do business with you. Your business may be classified as high risk for a number of reasons, ranging from the type of product or service you sell to the methods you use for marketing and selling that product or service.

How do you know if you are a high risk merchant?

Simply put, high risk merchants are those that run a higher risk of customer sales disputes, returns and chargebacks (a form of customer protection provided by issuing banks that allows cardholders to file a complaint regarding fraudulent transactions on their statement). While chargebacks may result from customer disputes and fraud, they can also occur when there are payment processing errors and authorization issues with a credit card. Many of the major steps neccesary to prevent this from happening, such as obtaining a magnetic stripe reading of the card or an imprint of the card as well as the signature of the cardholder, require having the actual physical credit card in hand. But that’s just not possible when you run an online business, and therefore any merchant that runs an online business that accepts credit cards automatically falls into the category of high risk simply because the credit card is not physically present for verification.

Other types of high risk merchants

Merchants may be also considered high risk if they deal in a specific type of product or service, particularly if the product they are selling is illegal in some places, such as guns and cigarette or tobacco products. Companies with high volume sales and a very high turnover, such as online dating services and travel services, may be considered high risk. Likewise for companies that offer a free trial followed by a recurring monthly fee. A start-up company with no proven credit history is considered high risk, as is an offshore business. The list of businesses that may be considered as risky is long, ranging from airline charters to vitamin sales with everything from automobile rentals to horoscope and fortune telling services to massage parlors in between. Chances are good that your business may fall into place somewhere on this list. It’s a long list.

What are the costs of being a high risk merchant?

Different merchant account providers have different guidelines. Some of these guidelines are very strict and the company will not accept a high risk merchant at all, while others may have guidelines that are less rigid. These companies may be willing to accept high risk merchants, but the terms and rates at which they do so may not be favorable. The cost can be high to the merchant. Basically, the merchant account provider does not want to deal with any business that may cause them to lose money, so they make sure they charge high fees to insure that the risk they are taking is worth it.

What can you do if you are a high risk merchant?

 Call us. We are high risk merchant account providers and we specialize in exactly what you need. We are willing to work with you and offer fair rates. When domestic banks decline your request for an e-commerce or mail order/telephone order (MOTO) merchant account because your business is too high risk, we’re here to help. When considering other providers, be very careful and read all of the fine print. A few providers play fair, but there are many that are just waiting to take advantage of you. They may think you are desperate if you are seeking their service and they may have excessive setup fees, unreasonable termination fees and other details lurking in the fine print that will add up in the long run. At High-Risk-Merchant-Account.com, we have nothing to hide. We value transparency and we do business with you on terms that are equitable to your business. 
Contact us

Fortunately, we can help. We have been in the Merchant Account Industry since 1995. Our specialty is getting high risk merchant accounts approved and set up so they are continuously active and your business can consistently accept credit card payments through your website and avoid loss of sales. We have lots of experience and can get your MLM business a merchant account that will meet the needs of your business via the most favorable terms possible. 

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