A high-risk account is one typically used by businesses that are considered high-risk. This can include businesses in industries that are known for having a high rate of chargebacks or fraud or businesses that are new and don’t have a long history of credit card processing.
Who Needs a High-Risk Merchant Account?
Several businesses may need a high-risk merchant account to process credit cards. Some common industries considered high risk include:
- Online gaming
- Adult entertainment
- High-ticket items
The Pros of a High-Risk Account
There are troves of benefits that come along with having a high-risk merchant account. Some of the most notable benefits include:
1. Increased approval rates
Because high-risk businesses are considered to be a higher risk for chargebacks and fraud, so they often have difficulty getting approved for a traditional merchant account. However, a high-risk merchant account has a much higher chance of approval.
2. Lower fees
High-risk merchant accounts typically come with higher fees than traditional merchant accounts. However, these fees are often lower than the fees charged by third-party processors.
3. More payment options
High-risk merchant accounts offer a wider range of payment options than traditional merchant accounts. This includes the ability to accept international payments and payments from high-risk customers.
What are the Drawbacks of a High-Risk Merchant Account?
There are some downsides to owning high-risk merchant accounts. These include:
1. Higher fees:
As mentioned above, high-risk merchant accounts typically come with higher fees than traditional merchant accounts. This is because high-risk businesses are considered to be at a higher risk for chargebacks and fraud.
2. Higher reserve requirements:
High-risk merchant accounts often have higher reserve requirements than traditional merchant accounts. You may need to keep a lump sum in your account to cover any potential chargebacks or fraud.
3. More stringent requirements:
High-risk merchant accounts often have more stringent requirements than traditional merchant accounts. This includes having a higher credit score and a long credit card processing history.
Qualities to Look for in a High-Risk Account Provider?
You should keep a few things in mind when looking for a high-risk merchant account provider. Some of the most important ones include:
- experience working with high-risk businesses
- competitive rates and fees
- a wide range of payment options
- flexible terms and conditions
What Do You Need to Apply for a High-Risk Merchant Account?
When you’re ready to apply for a high-risk merchant account, there are a few things you’ll need to have to get started. These include:
- Your business information: You’ll need to provide your business name, address, and contact information.
- Your business tax ID number
- Your processing history:
- Your bank statements
- Your ID:
You’ll also need a good credit score to qualify for a high-risk merchant account.
The Bottom line
If you are a retailer who needs a high-risk merchant account, there are a few things to keep in mind. However, a high-risk merchant account can be a great way to accept credit card payments if you are a business that is considered high risk by the credit card companies.