Understanding High Risk Merchant accounts and how to get them approved

Certain businesses have been classified as high-risk because of nature of the business that they conduct and because of the risks involved.

Some of the businesses identified as high risk are telemarketers, Internet/e-commerce businesses, adult businesses and leisure clubs. Adult and travel related businesses are considered some of the riskiest.

Some of the factors that lead to a high-risk tag are the likelihood of a chargeback, the credit history of the merchant account owner and the number of years that a business has been operational.

But it is not impossible for high risk merchants to procure a merchant account. Banks have made special arrangements to enable high risk merchants with merchant accounts. Banks normally take a nominal guarantee from the merchant to cover for charge backs and also limit the volume of transactions.

But by taking certain precautions and following some of the pointers mentioned below, one can easily get a merchant account.

  • High-risk merchants should always keep their books of business in order along with balance sheets and profit and loss statements. 
  • If the merchant had an earlier account, they must keep all processing statements ready so banks can evaluate their transaction history. 
  • Merchant account applicants must also maintain their credit rating high by clearing any past discrepancies and by paying any outstanding fees that may be pending. 
  • Research various credit card processors that are available and pick up the one that suits your needs the best.

While shopping for your credit card processors take into consideration some of the factors like:

  • Transaction Fees that are charged for high risk merchant accounts. 
  • Chargeback fees, as some processors my have a different structure for high risk merchant accounts. 
  • Discount Fees, the percentage that is paid to merchant account on per transaction basis. 
  • Fees or any other costs involved in using the high risk merchant account for e-commerce transactions. 
  • Closely scrutinize all literature and lookout for any hidden fees.

Study the processors, take precautions as mentioned above and follow the above mentioned broad steps and there will be no stopping you in obtaining a high-risk merchant account quickly. 

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