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A high-risk merchant account is a mandate for an online business to accept online payments from customers or other businesses globally. The process to apply for a high-risk merchant account is specified and restricted. Yet, some merchants or industries are regarded as high-risk. And may face further issues when getting a merchant account. Keep reading to know more about what are high-risk merchant accounts and what to evaluate when going to get one.

What Is a High-Risk Merchant Account?

A high-risk merchant account is a payment processing account preferred for a high-risk business. Whereas, a business is regarded as high-risk if there is a sensed risk of financial loss.

To perform underwriting for a merchant account. Usually, a bank must authorize the merchant for business banking and merchant services. A merchant is even required to know about the risk level of business assessed by the bank or credit card networks.

High-risk merchants may have trouble searching for payment processors, face stringent restrictions on their online business, and have higher fees for receiving payments online.

However, a merchant must be familiar with their risk level to understand which documents they require and which procedures they must obey. But businesses are usually not familiar with these risk levels presence.

Risk factors for an online business

Yet, these given factors drive an online business in the high-risk category:

  • Poor credit score
  • Dealing products or services labeled as high risk by VISA and MasterCard
  • An industry or business structure that has a record of fraud or chargeback issues
  • The average transaction of more than $500
  • Taking payments in various currencies
  • Businesses situated or functioning in high-risk countries and regions
  • Not being documented with local regulatory authorities
  • Presenting free trials
  • Delivering subscriptions or accepting recurring payments
  • Irregular payment processing

Even if a business is completely clean, banks consider the industry as an entire and assess other businesses in the industry as a measure. So, for instance, even though a travel agency has no record of fraudulent payments, competitors in a similar industry might. That’s why the travel industry regards high risk.



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