Merchant accounts are needed in order for a business to accept credit card payments. As a merchant, there are two places you can obtain a merchant account; a bank, or a third party provider. For online merchants the most popular, plus most cases cost effective, source is from another party merchant account provider.

A high risk processing account is required by businesses that, when compared to a ‘traditional’ goods/services business, have reached a higher risk of:

Bankruptcy

Fraudulent Transactions

High amount of sales

High rate of refunds

High rate of charge-backs

Other reasons a merchant may be categorized as a high risk are:

Merchants Location – Some merchant account providers won’t accept merchants from certain countries.

The Product/Service the merchant sells is illegitimate in some jurisdictions.

Merchant Credit history – Some providers will not accept merchants with poor or no credit details.

Due towards the high risk classification, most banks won’t provide your free account to those invoved with a high risk industry (such as adult entertainment, replica goods, pharmacy offshore merchant account etc). For this reason some vendor providers offer their services to both general merchants and heavy chance merchants.

Merchant account providers which developed to service high-risk merchants will most likely provide to the next stage of fraud protection, with a purpose to decrease the cost their merchants incur. However, in order to cover the advanced of risk, rates for a high risk merchant account will possibly be higher than their lower risk counter-parts.

When purchasing a high risk merchant account, there are a number of factors that you should take under consideration. Rates will be one very sound factors, as well as includes fees for refunds and charge-backs, along with transaction fees, the discount rate and ongoing fees. Require need to take into account fraud protection, customer service and reporting available a person as a merchant.