Negosentro.com | High Risk Merchant Account: Why Do You Need One? | If you’re planning to launch a business online, chances are that you’ve heard of high risk merchant accounts. It may sound confusing and overwhelming at first, but it can help your business go a long way. To get you started, let’s talk about what a high risk merchant account is, and why your business needs one.
What is a high risk merchant account?
A high risk merchant account is tailor-made for businesses that banks view to be risky. It is a payment processing account that allows businesses to accept payment from their customers. A European merchant account provider helps to enable businesses to accept payment from locations all over the world, regardless of them being high risk or not.
Credit card processors categorize merchants into two categories: high risk or low risk, depending on numerous factors. Thus, high risk merchants have a limited array of options when it comes to processors. They’re even prone to higher fees and more stringent rules. However, being labelled as a high-risk merchant is no reason to feel discouraged.
What’s the difference between a low risk and high risk merchant account?
A low risk merchant has the following characteristics:
- Monthly processed amount does not exceed $20,000
- Average credit card transaction does not exceed $500
- Low chargeback ratio
- Minimized returns
- Countries of operation are considered low risk
On the other hand, a high risk merchant has the following common indicators:
- Credit card transaction exceeds $500
- Over $20,000 sales volume monthly
- Bad credit history
- Excessive chargebacks
- Sells to countries that are notorious for high levels of fraudulent activities
Should you get a high risk merchant account?
If your business is deemed to be high risk, don’t worry! You will still be able to get a merchant account to process payments. However, it is important to note that the fees and terms of your contract may be less desirable compared to a low risk merchant.
However, you do have plenty of options when it comes to merchant accounts! Just make sure you find one that you can trust and offer the best terms and rates.
What are the fees involved with high risk merchant accounts?
Here’s the hard pill to swallow: high risk merchant accounts will cost more than low risk merchants. You have to be prepared to face the costs, especially when it comes to account and processing charges.
The bright side is that you won’t have to settle for merchant accounts that are out to take advantage of you. There are tons of options out there who can offer you the best and most competitive rates. Even though we gave you a heads-up on the fees and less favorable terms, you will still be able to find good deals.
Most high risk payment processors charge the following fees: set-up fee, monthly fee, and annual fee. Be sure to thoroughly read the terms and conditions before signing anything! Keep a look out for any early termination fees, especially if you are a new business-owner.
The important thing is to find a payment provider that you can trust to only charge you for transactions that happen in your website or app.
What to look for in a high risk merchant account?
Options for credit-card processors are everywhere, and it can get overwhelming making a choice. Be sure to take your time and weigh your options before you strike a deal with a payment processor! Here are some things you need to consider:
- Flexibility. There is no one-size-fits-all merchant account, and you should opt for one that offers the most flexibility.
- Transparent rates. You wouldn’t want to be surprised with exorbitant fees later on!
- Hands-on support. Money is the lifeblood of any business, so you would want someone that can help you in case there are any problems with payments.
- Seamless technology. Lags, bugs, and errors might deter any customer from proceeding with their payment.