subject: How A High Risk Merchant Account Can Keep You In Business [print this page] Merchants, especially online merchants, need to take credit cards in order to do business. Customers expect to be able to use credit cards to make purchases, not only for convenience, but for the protection offered by paying with plastic. Merchants need a either a standard merchant account or a high risk merchant account in order to accept credit cards as a payment method.
A high risk merchant account is a solution for merchants who find they are declined for traditional merchant accounts. Merchants may be declined for traditional or low-risk merchant accounts for a variety of reasons including the merchant's credit score, past credit card processing history, such a a higher than average number of charge backs, or the type of product or service the merchant is offering.
Certain types of legally operating businesses are riskier than others as they tend to experience an above average number of charge backs or they are targets for attempted fraud. These businesses will need a high risk merchant account even if the business owner has impeccable credit.
Criminals who steal credit card information prefer to use their stolen credit cards online, often purchasing high priced jewelry or electronics which they can easily re-sell. A high risk merchant account is often the only type of merchant account online high-end jewelry and electronic retailers can easily obtain.
Adult entertainment and gambling websites have difficulty getting standard merchant accounts as certain banks fear being associated with businesses whose product is not legal in certain countries. Adult entertainment and gambling websites may even have difficulty obtaining a high risk merchant account as banks are concerned about their image being associated with these types of websites.
Websites which sell digital products or consulting services will often need to obtain a high risk merchant account as the owners of these websites have difficulty proving they have delivered the product or service to the customer, giving them a higher than average risk for charge backs.
High risk merchant accounts typically have higher fees than standard merchant accounts because the high risk merchant account provider is taking a higher risk. This is the cost of business for merchants in certain industries who want to accept credit card payments.
A business owner should not feel slighted if they need to get a high risk merchant account in order to do business. It is not a judgment against their industry, it is merely a reflection of the type of customers who are likely to patronize their website.
