Who Can Qualify For High-Risk Merchant Accounts?
Many merchant services are willing to provide accounts to businesses that are deemed to be high-risk. These are entities that have a greater risk of experiencing fraud, a loss of data, or chargebacks when trying to handle transactions. High risk merchant accounts will be subject to higher credit card processing charges, but everything will be worthwhile if managed right.
There are many businesses that will qualify to receive high-risk merchant accounts:
Businesses with poor credit. A business that doesn’t have a positive credit history may be at risk of struggling to handle its finances, thus resulting in higher credit card processing charges.
Companies that engage in CNP transactions. Card-not-present transactions are useful for cases where someone doesn’t have a card on hand, but the potential for fraud can be high. High-risk merchant accounts are necessary for businesses that regularly process CNP deals.
Businesses that sell questionable goods. Any place that sells tobacco, alcohol, adult-oriented products, or offers gambling services may be a high-risk business. Companies in these fields often deal with customers who might not provide enough information for their purchases.
Offshore companies. An offshore company is one that works in the United States but operates internationally to take advantage of relaxed tax laws or legal rules. Such entities might not provide as many financial details as others, thus boosting their risks.
Those who have experienced many chargebacks. A chargeback entails money being returned to the buyer due to a lack of available funds or a dispute in the transaction.
Entities that provide extra control to the consumer. A business might give a customer more control over one’s experience, whether it entails selecting unique payment terms or using services in ways that might be different from what a company recommends. A business that cannot provide full control over what a customer can or cannot do may be at higher risk, as some customers might engage in questionable activities when using certain products or services.