Introduction
Merchant account permits businesses to process credit card payments including other forms of online payments. Besides all of that, a high-risk merchant account is a bank account which is made for businesses considered to be at a high risk of issues like fraud and chargeback. Besides all of that the categorization of high risk merchant account fees & accounts is because of the nature of business, its fiscal history, and the industry in which it works. Besides all of that, the possibility of high-ticket sales and card-not-present transactions can also leverage (influence) the classification. Besides all of that, high-risk merchant accounts mostly come with high fees and stringent contract terms as compared to the standard merchant accounts because the fiscal institution providing these accounts take more risk.
Negative Connotations of High-Risk
Further, the term high-risk can have a negative meaning, many of the businesses that operate in the industries are very risky and it is pivotal for the economic environment to have merchant account providers who work with these businesses. Let’s look at some of the characteristics of high-risk businesses. A high-risk business has some characteristics that influences the manner in which the fiscal institution perceives and treat the businesses. Some features are industry reputation. Some industries are known as high-risk because of the reputation for regular chargebacks, high-level of fraud, and refunds. Besides all of that, industries like adult entertainment, pharma, gambling and travel are most of the time known as high risk.
International Sales and High Chargebacks
Chargebacks occur when the customer will create a dispute regarding a transaction. Moreover, a business that mostly faces such disputes is seen as a responsibility of merchant service providers and is mostly considered as high-risk. Moreover, business that have a huge number of international transactions are most of the time deemed or known as high-risk, especially if they do business in or with countries that are known for high-risk of frauds rates. Then, comes the high-ticket sales. Businesses which regularly process high-value transactions like more than 100 dollars are at a higher risk of chargebacks and also, fraud and are more likely to be distinguished as a high-risk. Also, comes the bad credit history, in which fiscal stability is the important factor in knowing a business risk level, and a bad credit history can lead to a classification that is high-risk.
Other Risks
Then, comes the subscription-based services in which businesses that works on recurring payment or the model of subscription are high-risk because these kinds of payments are more likely to have chargebacks. Also, are the risk of fraud – like the businesses that have a history of fraudulent transactions are known as high-risk and then, comes the regulatory risk.
