About High Risk Merchant Accounts
Merchant accounts are necessary financial entities. They are accounts that allow a business to accept payments made by debit or credit cards. The merchant accounts have three partners: the business or retailer, the bank and the payment processor that high risk merchant account providers for tech support handles the payment.
There are many types of businesses that are considered to be of a higher risk and, therefore, will have high risk merchant accounts. In fact, the same type of business can be either low or high risk. For example, a clothes seller that is located in a shopping center is a low risk business, whereas that same clothes seller becomes a high risk business if it sells clothes over the internet, by telephone or by mail order.
In many cases it is the selling and payment practices that will determine whether a business and its associated merchant account is considered to be at a higher risk that other business. The following trading practices will label a business as a higher risk and will cause the business to need a high risk merchant account. These practices may include:
- Accepting credit card payments without the cardholder being present such as over the phone or internet.
• Having more than $25,000 internet sales per month.
• Featuring seasonal or intermittent online sales.
• Selling to international customers.
• Using the mechanism of free trial offers to attract customers and then imposing recurring monthly billings.
There are other factors that may cause a business to need a high risk merchant account. These factors can include:
- It is a new online business.
• The business location is suspicious or seems unstable.
• The owner has a bad credit check.
• The business’s previous merchant account was cancelled.
• There are too many charge backs where the cardholder is asking for a refund or is cancelling the sale.
There are some businesses that must use high risk accounts because of the inherent nature of the business. A few of these businesses are: dating services, travel companies, timeshare sellers, diet programs, multi-level marketers, collection agencies, auto rentals, detective services, home based businesses, herbal supplement distributors, pharmacies and adult product sellers. There are also many more businesses that are considered to be of a higher risk that regular companies.