subject: Threading Potential Business – Threats with High Risk Merchant Accounts [print this page] Threading Potential Business Threats with High Risk Merchant Accounts
In most financial transactions, financial institutions like banks assess businesses, establishments and even individuals they transact with. They then assess whether that person or business is a viable customer for their services or is a risk. If the company or person is a risk, the bank will not do business with them. This applies in merchant services as well; hence, the need for high riskmerchant accounts.
High riskmerchant accounts, as the term already describes, are accounts that cater especially to high risk businesses. Of course, merchant service providers have different standards when it comes to high risks. Basically, a business with a high chargeback volume is a high risk business. Those that have high dissatisfaction rates are also high risk businesses as well.
In short, a business can be considered as an undesirable candidate if there's a chance its clients will ask for a refund after the payment has already been processed. Businesses with money-back guarantees are also high risk or undesirable businesses.
Another measure of being a risk: if the business attracts a large number of credit card frauds. Certain businesses have higher percentage of credit fraud; hence the categorization.
Some high risk businesses include several website business operations (such as gaming and dating websites and hosting service websites), collection and employment agencies, magazine subscriptions, airlines, businesses in the adult entertainment industry and many others. Businesses in this list can get high riskmerchant accounts.
A high risk account is just like normalmerchant accounts, except for a few differences. For instance, many high risk account providers require a reserve every month. The reserve is an amount of money placed in an escrow that will only be deducted in case of chargeback.
Most high riskmerchant accounts are provided by third party processors, although a few banks may offer such kind of service. In any case, transactional and monthly fees for this kind of merchant account may be higher than those charged by usual providers, although this is only normal. The additional price is part of their guarantee due to the fact that the business is a risk.
