Have you been told you need a high risk merchant account? What does that mean, exactly? Why can't you just get a Stripe or PayPal account like everyone else? This article aims to explain what a high risk merchant account is, and why you may need to use high risk merchant account providers to accept credit cards for your business.
What is a High Risk Merchant Account?
A business or industry known for higher rates of chargeback and fraud, or warrants more detailed investigation as to its legality and regulation status, typically needs a high risk merchant account. Find out more about what makes for a high risk merchant account.
For example, Stripe maintains a list of high-risk and restricted businesses as defined by their risk department and financial partners. Notice that many of them are obvious for being illegal or of dubious legality. But other business types are perfectly benign and legal in principle, such as travel-related businesses.
What To Look For In High Risk Merchant Account Providers
What are the weaknesses of high risk merchant accounts? One well-known issue is that you have to pay higher charges and processing rates. This is a direct result of a higher risk. Likewise, know that banks may demand a reserve, typically a percentage of processed volume, as collateral for chargebacks and fraud and potential associated fines.
These are businesses with a higher possibility of chargebacks, so clearly they accompany stricter terms. In any case, when you process payments with solid high risk merchant account providers with the latest anti-fraud and chargeback alert tools such as Visa Merchant Purchase Inquiry (VMPI), you can reduce your danger of chargebacks and fraud with confidence.
At the point when you apply for a high risk merchant account, recall that its terms may be stricter than those of a standard merchant account, so read your agreement carefully. Check for hidden or additional expenses, rates, and how high is the rolling reserve.
Every processor or acquirer determines risk differently, based on their own policies and the bank's underwriting rules.
Finding a high risk merchant account that will be an ideal fit for your business can be hard. At IntegralPay we work with you to identify online payment processing options for a variety of industries considered "high risk" through our vast network of acquiring banks and payment service providers worldwide.