High Risk Merchant Service

When applying for a merchant services account, the business owner soon finds that certain businesses are considered high risk businesses and many credit card processing companies will not consider the business for a merchant account, and for many reasons. They then must apply for a high risk merchant service account. Some types of businesses generally render higher levels of risk for banks or credit card account processors.

A high risk merchant service account is determined by the possibility of the high number of charge backs by customers, non-satisfaction of a product or service, or other factors. Any type of business that does not physically process a credit card face to face, is automatically considered to be high risk. There are certain types of businesses that most banks and credit card processors consider to be high risk. When a business is approved for a high risk merchant service account, the bank sets it up like a line of credit, which allows the high risk company or individual (the merchant) to receive payments from credit and debit cards used by their customers. High risk type businesses will always pay higher application fees based on the risk factor of the business, and usually higher processing fees. There are some merchant processing companies that specialize in high risk merchant accounts by often offering competitive rates, faster payouts and/or lower reserve rates. Much of the terms offered will depend on how strong the business owner is financially and their background. Many of the companies that will accept high risk merchant businesses will use other safeguards to protect themselves like delayed payments for a period of time until the business proves itself as being qualified for a regular account.