A merchant account is a special type of account that allows legal entities to receive funds by paying for a service or a buyer of goods with bank cards. In order to obtain this type of account, the approval of a banking organization is required. An increasing number of legal entities prefer to use this type of account due to the specifics of the business.
High-risk merchants cannot claim the usual agreements on the processing of information used when making a payment with a bank card. They choose to cooperate with plastic cards and processors that offer high-risk services and are ready to be fully responsible for all processes. In this regard, the cost of "high-risk" is many times higher.
What is this type of account
Each financial institution that carries out the full range of operations for interaction with card service points and the processor calculates the risk in its own way. It assumes a completely different set of parameters. Presumably, chargebacks and scams are calculated. As a result, as the chargebacks increase, the risk increases.
There is a certain category of sellers who have some advantages over the usual processors:
- constant payments;
- ever-increasing number of sales;
- sales in multiple currencies.
Generally considered "high risk" for one of the following reasons:
- being on the "black list of merchants";
- the account is lost due to the fact that financial institutions cannot maintain the level of sales claimed by the financial entity;
- the account has a risk of losing reputation, especially for stores selling goods from the 18+ category;
- you are in an industry that has a history of payment dispute procedures initiated by the bank at the initiative of the customer.
There is a specific list that needs this type of account:
- Paranormal activity
- People and companies supplying firearms
- Annual membership
- Software download
- Making a purchase of goods through a phone call or by sending a letter to the post office
- Collateral bonds
- Buying goods and services through an auction
- Attracting other people who find more buyers of goods or consumers of services
- Sale of electronics online
- Products category 18+
- Sites for finding friends and lovers
- Debt service
- Telecommunications
- Purchase of goods presented in the store on TV
- Services in registration of permits.
Types of service offered
Despite the fact that theoretically the business is considered profitable, there are a large number of problems:
- The business was blacklisted by credit card companies;
- Selling expensive items, such as cars;
- The company is engaged in the sale of services for the future, for example, booking airline tickets;
- Industries with persistently high chargeback rates.
Should I open a high risk merchant account?
If it's a question to open or not, it's definitely worth doing. Right now, contact our specialists who will advise on the type of account.