High-Risk Merchant Account

On-line shopping has become ubiquitous and has proliferated through every aspect of life. If your business has a high degree of risk for fraudulent transactions, but you want to accept credit card payments, you will need to open a High-Risk Merchant Account.

Service providers use several traits to try and determine whether a particular merchant will be classified as a high-risk or not. In the world of e-commerce, these factors are evolving. They will change depending on the economic climate, but there are some factors that remain constant. If your company falls into these types of categories, you can be pretty sure that you will need a High-Risk Merchant Account:

· A start-up, in almost any industry, with little or no history of processing credit cards

· An industry that has a reputation for high numbers of chargebacks and returns

· Expensive items for sale, especially things like airline tickets or timeshare holidays

· On-line sites that rely on subscriptions such as magazine sales

· Very high-volume businesses

· Poor credit history or bankruptcy

· You are targeting sales from a country that has a reputation for perpetrating fraud.

A High-Risk Merchant Account will bring with it much stricter terms that other types of merchant accounts. Read the contract very carefully, check for any hidden fees, and note the amount requested as your rolling reserve.

A rolling reserve is the amount of money held back by the bank or payment processor to cover the possibility of refunds or chargebacks being processed. It can be anywhere between 5% and 15% of the transaction value and can be held for anything up to a year. The calculation of the rolling reserve is based on the bank’s analysts who are assessing the risk posed by your company.

When applying for a High-Risk Merchant Account here are some characteristics that you should look for:

· Look for a service provider that has a range of banks that they work with. Some banks work better with specific industries than others.

· Ensure that your service provider works within the guidelines laid down by the major credit card companies.

· It is wise to insist that your service provider uses 3D secure authentication to add an extra layer of fraud prevention.

· Internet fraud is an ever-growing problem, so ensure that your service provider is PCI DSS Compliant.

High-Risk Merchant Account holders should also ensure that the support from their service provider is 24/7. In the industries that come with High-Risk Merchant Accounts, the customer cannot afford to have an unresponsive payment environment.

High-Risk Merchant Accounts do come with many extra strings, but they are invaluable for certain industries.