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 a third party merchant account provider.
A high risk merchant card account is required by businesses that, when compared to a 'traditional' goods/services business, have a a higher risk of:
High quantity of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized to be a high risk are:
Merchants Location - Some merchant account providers won't accept merchants from certain countries.
The Product/Service the merchant sells is illegal in some jurisdictions.
Merchant Credit report - Some providers will not accept merchants with poor or no credit details.
Due into the high risk classification, most banks will not provide business relationship to people in a riskly industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). For this reason some third party providers offer their services to both general merchants and precarious merchants.
Merchant account providers which developed to service high risk merchants will generally provide the next stage of fraud protection, you will find that decrease the cost their merchants incur. However, in order to cover the more fantastic range of risk, rates with a high risk merchant account will definitely 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 of the biggest factors, as well as includes fees for refunds and charge-backs, along with transaction fees, the discount rate and recurring fees. Require need to contemplate fraud protection, customer service and reporting available for as a merchant.