Wednesday, May 11, 2011

What is a "High Risk" Merchant Account

Some Merchants in certain categories (but definitely not all) that deal with high volume sales in eCommerce are likely to be designated as “high risk” because they might have a high rate of charge-backs. Chargebacks occur more often when the merchant does not actually see and swipe the credit card. This is why traditional retail merchants are able to avoid a large percentage of them, whereas Internet merchants are not. Further, many of these businesses function within industries with perceived (and I need to stress the word perceived because I work with TONS of merchants that this doesn’t apply to) reputations for low product or service quality, minimal authenticity and order fulfillment failures.

Some merchants who are limited to applying for High Risk Merchant Accounts become frustrated with their limited options and wonder if they will ever be able to apply for a Low Risk Merchant Account. The reality is that if your industry is well established as a high risk category, you will likely require a High Risk Merchant Account for the life of your business. If, on the other hand, your credit history and business practices are the reason for your high risk designation; you may be able to make some reasonable changes and qualify for a Low Risk Merchant Account in the future.


High Risk Merchant Accounts include:

Merchants with Bad Credit or TMF
Subscription services - Multi level marketing - Psychics/Fortune Tellers
Direct telemarketing - Travel - Vitamin/Herbal supplements
Membership services - Tickets - High volume Merchant Acccts
Adult websites - Dating sites - Telecom
Online pharmacy - Timeshares - Mail Order/Membership Clubs

So, are there still good solutions for Higher Risk Merchants? Absolutely! Just because you are conducting business is one of this higher risk categories doesn’t mean you will not be able to get an account. Work with processors, (like myself :))who have experience in this area and understand the business. We can probably help you implement strategies for chargeback reduction.

While its true that the majority of high risk accounts will be placed offshore, we can definitely look at the business and see if domestic is an option.
If you have any questions regarding High Risk accounts, don’t hesitate to contact me.

JR

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