High-Risk Merchants

High Risk Merchants

A high-risk merchant account is required if you run an online business with a high risk of chargebacks and wish to process credit card transactions. But what exactly is a high-risk merchant account, and how can you tell whether you need one?

A high-risk merchant has a number of characteristics. The world of high-risk e-commerce is always changing and evolving. We like to think that after more than 15 years of providing high-risk merchant accounts to e-commerce enterprises, we've stayed on top of changes and laws. When a bank classifies a company as high risk, it could signify one of several things:

If you're a new business with little or no credit card processing experience,

An industry tainted by high chargeback and return rates

The high price (such as timeshares or airline tickets)

Products or services that need a subscription, such as online dating or magazines

A merchant whose merchant account has been terminated by a bank

Credit issues, such as flaws and inconsistencies, as well as a history of bankruptcy, are all factors to

Nutraceuticals, for example, are high-volume enterprises.

A merchant's target market is a country or a specific region.

A high risk merchant account is a type of commercial bank account reserved for merchants who exhibit a high level of risk in their operations.

Acquiring banks and payment service providers are boarding high-risk merchants with caution in one form or another, maybe more than ever before:

Increasing the number of KYC documents required and tightening underwriting procedures

Only allowing specific high-risk business categories to enter.

Volume caps, transaction security presets, and/or mandated chargeback protection schemes

HOW IS RISK DETERMINED?

The landscape of high-risk merchant accounts has changed: acquiring banks, credit card issuers, and big-name brands have become aware of the danger that some merchants and enterprises pose.

Before being approved for a merchant account, businesses are assessed to see how much danger they bring to the acquirer. A number of variables are taken into account. Some, but not all, of the features that are considered dangerous are as follows:

The merchant is now listed in the MATCH List database because prior merchant accounts were closed,

The company is new and has minimal experience with payment processing.

The merchant's industry is renowned for having a high rate of chargebacks or is designated as a high-risk MCC by the card networks.

The merchant uses a subscription billing model to sell products or services.

In certain high-risk countries, the company sells to overseas customers.

The business specialises in custom-made items.

The merchant's average ticket value is quite high.

The sales model includes things that will be delivered later or in the future.

The acquirer's reputation is at jeopardy because of the items the merchant sells.

Traditional merchant accounts are not available to high-risk businesses. They'll need to work with a payment processor that specializes in high-risk merchant accounts.

Payment processing with a high-risk merchant account has both advantages and disadvantages.

To compensate for the risk they provide to the payment processor's bottom line, high-risk merchants often pay higher transaction processing and chargeback costs. They're also more likely to have money in the bank. High-risk merchants, on the other hand, are frequently given a higher chargeback-to-transaction ratio.

PayStudio is a financial technology company that offers the best in class white label payment gateway required for a business to excel in payment processing that's secure & customizable.

Serving well-established enterprises all over the world, as well as mid-sized startups aiming to expand their operations.

Contact us at

(+44) 0 (800) 887 0291

[email protected]

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