A High-Risk Merchant Account implies that your payment processor has labeled your business at a higher risk of fraud or chargebacks. High-risk merchant accounts pay higher processing expenses to compensate for the risk the payment processor is taking on.
What Is a High-Risk Merchant Account?
A payment processor names a High-Risk Merchant Account if they've decided your business account is at higher risk for chargebacks, fraud, or a high volume of profits. There are many reasons this could be the situation — because you are a new merchant who hasn't processed payments previously or because your industry is viewed as high risk and has a high likelihood of fraud (e.g., controversial items), for instance. High-risk merchant accounts pay higher processing expenses to represent this risk.
High-Risk Means Higher Fees
Each credit card processing stage is unique, yet high-risk merchant accounts will be dependent upon higher expenses no matter how you look at it. By and large, processing expenses for all transactions will be higher, in some cases over two times that of low-risk merchant accounts. Although low-risk merchants are likewise paying a chargeback expense (an expense you pay when a client questions the accused straightforwardly of their credit card), high-risk merchants for the most part pay higher chargeback charges.
A high-risk merchant might be obligated to get into longer contract terms, an early termination charge, or a month-to-month or yearly expense. High-risk merchant accounts may likewise be dependent upon a rolling reserve, where the payment processor holds a specific percent of your pay until it can additionally check if your transactions were not fraudulent or at risk of chargeback.
How Would I Get a High-Risk Merchant Account?
At the point when you apply for a merchant account, you'll be expected to give business and expense accounts. After your application has been processed, your payment provider will survey whether you are a high-risk or low-risk merchant, and adapt their arrangement likewise.
Some payment processors are more appropriate for high-risk clients, so it's smart to investigate various providers and find the one that most closely suits your business needs.
Conclusion: High-Risk Merchant Account
Before picking a payment processor, you'll need to read the agreement carefully, as each bank and payment processing platform is unique and has various terms for the merchants, they label high risk.
