Introduction
One of the most important things that you ought to know about the merchant accounts is that, it permits the businesses to process credit card payments including other online payments too. Besides that, a high-risk merchant account is bank account which is made for businesses that are known to be of high-risk and has issues like chargebacks and fraud. This kind of categorization, can be because of the kind of business or business nature, the fiscal history, or the industry in which it works. You can also look at; high risk merchant processing & broaden your horizons on the same. Moreover, the possibility of high-tickets, and transactions (card-not-present) can also influence this classification.
High Fees and Contract Terms
High-risk merchant accounts mostly come with higher fees and stringent contract terms and compared with merchant accounts that are standard, because the fiscal institutions offering these accounts take on more risk. Although, the term, ‘high-risk’ can have negative connotations, & many businesses work in industries that are inherently risky, and its pivotal for the economic environment to have merchant account providers who help these businesses. Let’s look at characteristics of high-risk business. One of the most important things that you should know is that high-risk businesses have some characteristics which distinguishes them from the standard-risk business & these characteristics influence the way in which the fiscal institutions perceive & treat these businesses.
Characteristics of High-Risk Businesses
The first and the foremost characteristics of high-risk business is the industry reputation. Some industries are termed as high-risk because of a reputation where there are frequent chargebacks, high level of fraud, refunds and so on. Adult entertainment, pharma, gambling, and travel are some of the high-risk industries. The high chargebacks rates happen when the customer dispute a transaction. A business that mostly faces such kind of dispute is known as liability to the merchant service providers and is mostly known as high-risk. International sales are another in which if a business have huge number of transactions of international nature, then they are deemed to be high risk, especially if they are in business with countries known for high fraud rates. Then, comes the high-ticket sales, in which businesses that regularly process high-value transactions of US $100 or more, then they become a high-risk business have also, risk of chargebacks & fraud which is classified as high-risk.
Other Characteristics
Then, comes the bad credit history in which fiscal stability is the main factor in identifying business risk level & a poor credit history can lead to a classification of such as high-risk. Then, comes the subscription-based services which are also known as some characteristics of high-risk business, then comes fraud risk in which companies are prone to high levels of fraud or businesses & has a history of fraudulent transactions & also, comes the regulatory risk.
