Opening a High Risk Merchant Account

Certain kinds of businesses such as travel, cruise, e-commerce, Forex, casino, business process outsourcing, telemarketing and several others mostly operate in a high risk arena. The trade volumes and monetary transactions involved in these businesses are huge and hence have them prone to all kinds of risks both offline and online.

Because of the very natures of such businesses there always lies the possibility of fraud payment, where it becomes essential for these businesses to consider introducing high risk merchant accounts in their system. These accounts can be accessed easily by contacting agents/service providers who specialize in these fields. 

What do these service providers do?

The high risk merchant account service provider works with banks and acts as a gateway for payment solutions. This method helps in protecting clients from various kinds of transaction frauds. However, keep in mind that a merchant account is not the same as a payment gateway. 

Opening a High Risk Merchant Account

The foremost condition put forward by a high risk merchant account provider is that the business should possess a transparent and default free credit history. In case, your business carries an impaired credit history, you may find it difficult to arrange for a high risk merchant account for yourself.  So, credibility is must in order to secure a high risk merchant account.

There are certain businesses which hide away their impaired credit history in order to become eligible for the account only to be exposed later by the service provider, resulting in their own loss. Such behavior is not advisable.

Secondly, make sure you are fully aware about the charges associated with the offshore merchant account that you are considering to take up. The major charges include transaction fee, discount rate, reserve fee, chargeback fees, monthly minimum fees, and e-commerce facilities.

You would find that high risk merchant account providers charge slightly higher fee than the regular accounts. The higher fee charged is on amount of increased risks associated with running such businesses. Also, it’s worth paying a bit more in order to get access to a safe payment transaction gateway that they have in offer.

It’s always advised to thoroughly check for the hidden costs. There are times when businesses tend to overlook certain minimal costs initially only to get troubled by them later.

Once satisfied with the conditions put forward by a service provider, then only apply for needed services.

You are only required to submit certain documents (to the relationship manager of the company) which are needed to open a high risk merchant account with the service provider.

The common advantages offered by a majority of the high risk merchant accounts include:

a.    High charge back threshold

b.    Online transaction reports

c.    Compatible with major credit cards

d.    Round the clock customer service

 It is important that all businesses operating on higher risks must ensure that they have high risk merchant accounts incorporated with their system. Not only will it help in trimming down various kinds of systematic and unsystematic risks in the system, but will also make monetary transactions much safer.

What is a High Risk Merchant Account?

When you are in business, marketing your products or services alone is not enough. It’s the age of paperless money, electronic transactions and therefore, you should be extremely careful with your customer’s money and their personal information in order to ensure business operations. In no way or at no time would you want your customers to think that they are indulging in a faulty service and that their money or financial information could get compromised! That’s where high risk merchant accounts can help.

If you are running a business, which operates in a high risk market and has risks of financial failures looming large, you almost certainly need a high risk merchant account; a regular merchant account won’t serve the purpose and even if does, it might fail you at the most crucial hour. 

So, in a Nutshell …  

A high risk merchant account is a facility provided to businesses that accept a major chunk of their payments through credit cards (Card Present or Card Not Present). Protected by anti-fraud security systems, high risk merchant accounts help e-commerce enterprises (and others who receive orders telephonically) to introduce additional layers of security so as to eliminate the possibility of credit card fraud or data theft. 

Do You Need One? 

No matter what type of business you are running, you will need a merchant account at some point in time.

Why I need a high risk merchant account?

Well, because this is the best way to receive payments via credit or other types of cards. Operation of such an account is governed by an agreement between a credit card acceptor (business) and the acquirer (financial institution, providing the business the facility).

High risk merchant services no doubt charge higher fees in order to compensate the risk involved, they also save businesses from TMF statuses and deduct relatively lower chargeback fees. Such services are governed by flexible chargeback policies.  

Who Is An Acquirer?

A bank or financial institution, which provides a business credit card merchant account and has relationship with the merchant’s personal bank account and the Visa and MasterCard services is called an acquirer.

The acquirer provides high risk merchant accounts and is then liable to clear the card transactions to the merchant’s bank account as and when the transactions are charged from the card holder’s account. 

Important Pointers 

Acquiring a high risk merchant account from one of the acquirers makes it easy and safe to process credit cards. It is the quickest and easiest way to receive a payment that is due to the business account.

From online casinos, adult service providers, travel services, telemarketing businesses to home run businesses and online auctions, hundreds of e-commerce businesses get such accounts. Businesses with high transaction volumes, bad credit, off shore operations or TMF statuses are the best candidates for high risk merchant account services. 

While, a high risk merchant account is really useful for high risk businesses in particular, other types of business which are no high risk type can instead acquire a standard eCommerce merchant account for easy processing of credit cards and other such instruments online.