Do you want to get credit cards processing online, over the phone, or via mail order? Have you had a tough time getting approved for a high risk merchant account? If so, you may be wondering: What is it – “high risk”, and how does it apply to my business?
What is a High Risk Merchant?
Any business where there is no customer’s signature on the receipt of the credit card purchase – all e-commerce and mail order/telephone order (MOTO) businesses – has the potential to be labeled “high risk” by banks providing merchant accounts. In the list below you will find out what high risk merchants consider which some card-not-present businesses include:
- Adult entertainment merchants
- Online travel agencies and travel merchants
- E-Cigarette merchants
- Online pharmacy merchants
- Online spieling merchants
- Pre-paid calling card merchants
- VOIP merchants
- Offshore merchants
- International merchants
- Mail Order / Telephone Order (MOTO) merchants
- FOREX merchants
- Tobacco merchants
In case of not being aware in what industry you are, your business may be considered high risk if:
- Starting a new e-commerce business you expect high monthly sales volumes.
- You have a history of customer disputes or a high chargeback rate.
- Availability of a high average transaction value.
- You offer a subscription product or service.
- You’ve had a merchant account terminated by a bank in the past.
- You have recent bank failure or just a poor credit history.
High Risk Means Hard Times
If your business is considered to be high risk, you might be refused for a merchant account without knowing the reason. Even if you are approved for a high risk merchant account, banks might set strict trading conditions that make it impossible to run a beneficial business. High risk merchant accounts often require:
- Large up-front deposits
- Delayed payouts
- High reserves
- High credit card and transaction fees
- Caps on processing volume
All of those restrictions can mean the difference between your business’ success and failure.