Merchant accounts are essential for any business to accept payments through credit/debit cards. However, there are certain criteria that need to be fulfilled if your business has to get approved for obtaining a online merchant account. One such criterion is the amount of risk involved in the business type. Usually, banks are apprehensive about providing merchant accounts to high risk businesses such as online casinos and other gaming sites, adult services, pharmaceutical products, travel agencies, telemarketing, online auctions or online dating agencies. This is because these high risk businesses are associated with greater incidences of credit card frauds. This is where the utility of a high risk merchant account comes.
Setting up a high risk merchant account can be really challenging as it is not provided by every merchant account provider. And even if somebody provides such an account, the rules and regulations are very stringent. Better is your credit rating better are your chances of getting approved for setting up a merchant account suitable for your high risk business.
Interestingly, there are certain advantages of setting up a high risk merchant account. Some of these advantages are listed below.
• High risk merchant accounts are usually required for offshore services so as to cater the needs of international customers. Hence, these accounts usually accept or process multicurrency transactions, thereby generating a greater amount of foreign exchange.
• These accounts usually accept every type of credit card, be it from Visa, MasterCard or American Express. Also, credit cards issued by almost every national/international bank are accepted.
• Interestingly, another benefit is that these accounts are offered with options such as 24×7 Customer support and real-time processing. Also, if you choose any offshore merchant account provider, there are chances of getting tax rebate for setting up a merchant account with them.
Understandably, the cost of setting up a high risk merchant account is very much expensive than that of setting up a regular merchant account. Also, these costs tend to vary with provider. Another factor that determines the pricing is the amount of risk involved and the type of business. Greater is the level of risk higher will be the price.
In general, merchants wanting a merchant account of high risk are required to pay a very high set up fees after the application is approved. Apart from this, other credit card processing charges such as discount rates, transaction fee, chargebacks, and monthly and annual maintenance fee are also higher than normal. The reason for these higher charges must be because of the greater amount of risk taken by the merchant account provider while approving the account.
Tags: merchant account application | merchant account application | internet merchant accounts | internet merchant accounts | credit card processing | merchant account | cards merchants | cards merchants | accept credit | accept credit
September 8th, 2009 at 7:15 am
For high risk merchants, choosing a processing company with domestic bank options in addition to offshore options is critical…thanks for sharing.
June 18th, 2010 at 3:08 am
You mention that the start up costs for a high risk merchant account is high. While this is generally correct, the industry is seeing a decline in pricing as more competition enters the market. high risk merchant account providers are lowering their prices to stay competitive with one another. On the flip side of this, it is very important to take caution and do your due diligence before signing up for a high risk merchant account. There are way too many horror stories out there about processors who just skip out and run with the money.