What Makes a High Risk Merchant Account High Risk?


This depends on your service provider although providers have formulated guidelines to categorize certain business types. Let’s take a look at the fundamentals for a moment.

These Business Types might be:

Computer Sales, Antique Sales, Bail Bondsmen, Pawn Shops, Medical Marijuana best high risk merchant account provider Sales, Escort Services, Online Adult Web Sites, Adult Bookstores, Adult Products, Collection Agencies, Debt Repair, Debt Collection, Debt Consolidators, Credit Repair Services, Credit Counseling, Gaming, Lottery, Raffle Businesses, Travel Agencies or Travel Related, Gift Certificate Clubs, Get Rich Quick Schemes, Online Pharmacies, Dating Services, Cellular Phone Services, Drug Paraphernalia, Pharmaceuticals, Third-party Processors, Fortune Tellers, Sports Odds Making, Electronics, Bankruptcy Attorneys, Charities, Time Share Sales and Extended Warranty Companies.

Bank providers will be looking at several specific things when reviewing your application. Some of these things might be:

Charge backs- Certain businesses types have a high ratio of charge backs inevitably.

Credit card fraud- Some businesses are naturally going to be more vulnerable to fraud.

Legality- This always poses a high risk for business that may be considered ‘closely- related to being illegal’ or questionable.

Marketing- Products or a service that may promise quick results that the consumer may be easily unsatisfied with puts this category in a higher risk.

Target Market- International markets can be considered higher risk for obvious reasons.

Type of Merchant Account- Wireless or internet processing is always going to be high risk vs. a merchant account in which the card is presented called Card Present Merchant Accounts.

Business Operation & Type of Merchant Account- Operation type will have an affect on the risk factor: telemarketing, multi-level marketing, third-party orders. Wireless or internet processing is always going to be high risk vs. a merchant account in which the card is presented (Card Present Merchant Accounts)

It is possible that your business may fall under a normal risk where other banks may consider your business at higher risk. This is where a good broker will come in handy. A merchant company that has been in business for quite some time and has numerous solid banking relationships equals banks that approve high risk accounts is key! This will ensure the best scenario for your business.

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