Nowadays, high risk merchant accounts are required for different business types, those that are deemed as being undesirable by the credit card associations.
We have various businesses that fall within this category. This does include but is not limited to those in the adult industry, travel industry and other examples we will highlight soon.
Such businesses are seen as being undesirable due to various reasons. However, in most situations the main reason is the high risk of chargebacks that appears. The history that the high risk businesses have in common is based on a high chargeback percentage when compared with the other business types out there.
In case you were not aware of this, the chargeback happens when the customer has a charge reversed by simply complaining about the particular transaction to the bank that issued the credit card. When there are many complaints that appear, the merchant will have its account shut down. In many situations this is irreversible, leading towards huge business operation problems.
As mentioned above, more examples of the necessity of high-risk merchant accounts in high risk industries include the following merchant types:
Time share sales
If you are currently looking for a high risk merchant account, you want to focus on finding those companies that specialize in the high risk accounts. Such a firm would also offer regular merchant accounts but it is important to focus those that are high risk because of the quality that is offered. Different banks are going to accept varying risk levels. This basically means that you have to be prepared for what is to be offered. High risks do exist in this case and the traditional merchant account is often not available for the high risk industries.
Most companies first think about getting a regular merchant account. When this is not available, the application process for the high risk merchant account starts. The high risk application is something that is not at all easy to go through since the business will be thoroughly checked before application is accepted. Much patience is often needed in order to guarantee that the application has positive results.
What can you expect when you apply for the high risk merchant account?
It is important to understand that these high risk merchant accounts are different than those that are regularly offered for the normal merchants. Both application and association fees are going to be much higher. The business license is going to be analyzed during the application process, just as the financial statements and even articles of incorporation, if the provider has this listed as a policy. Some providers even go as far as to analyze marketing materials and principal statements in order to determine the possibility of success of the serviced applicant.
Although gaining that high risk merchant account can be difficult, it is something that offers numerous advantages, especially when referring to the high risk businesses that were not able to receive credit card payments till now.