What Are High Risk Merchant Accounts?

January 15, 2013 | Author: | Posted in Finance

Certain merchant accounts are categorized as high risk merchant accounts by merchant bank service providers like Solid Trust Pay depending on the business type the merchant is involved in. Many merchant account service providers rate certain business types as posing a higher risk level to the bank.
Businesses that fall in to this category include various internet merchant accounts, adult services, timeshare, telemarketing , gambling and such businesses which have the potential for excessive returns resulting in high volumes of chargebacks, and businesses more susceptible to fraud.
High risk merchants can be classified in to 2 basic types of merchants,
Administrative High risk merchants:
Merchant categories with high refund and chargeback rates, those with an elevated risk of bankruptcy and categories with high likelihood of consumer fraud are included in this category.
Regulatory high risk merchants:
Businesses that sell products and services that are regulated by the United Stated or other jurisdictions are included in this category. Gambling and gaming services, adult entertainment services and prescription pharmaceuticals are examples of products and services in this category.
If you are in a high risk business category and want to accept credit card payments for your business you may be faced with the problem of banks refusing to open a merchant account for you or request for more documentation than what would be required for a standard merchant account. But you need not be discouraged as there are merchant banks like Solid Trust Pay that offer high risk merchant accounts to enable you to process credit card transactions for a reasonable charge.
Merchant banks such as solidtrustpay structure the fee schemes for merchant accounts depending on the risk factor; higher the risk posed to the bank the higher the fees charged. So when you are looking out to open a high risk merchant account following certain practices will help you secure a high risk merchant account with fair pricing with a reputed bank as solidtrustpay.com.
Control refund and chargeback rates: a high volume of chargeback is one of the reasons that a business will be categorized as high risk by solidtrustpay and other merchant banks. Therefore take necessary measures to keep these factors as low as possible to appear favorable to the banks. Having a generous refund policy will help reduce chargebacks.
Have strict financial controls and precise reporting: if you can show consistent profits and retained earnings the banks will look at you more favorably even though you are categorized as high risk.
Open multiple merchant accounts: this will lower your risk profile by distributing the sales volumes and therefore the charge backs and other risk factors among the several accounts and provide back up in the event another account is terminated.
Research: do thorough research on whether a high risk merchant account will be suited to your business, if it does find out the rates offered by several banks, click on to solidtrustpay.com to find out the best rates offered.
Solid Trust Pay will offer you a solution to your high risk merchant account search. Log on to solidtrustpay.com to find out more.

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