If you are running a business and collecting credit card payments, you will need a merchant account. A lot of people don’t realize that they don’t qualify for a standard merchant account due to several various factors. Those people then require a high risk merchant account. When it comes to setting up a merchant account for your business, it is important to realize that there are some accounts that are considered high risk. Your business may be considered high risk due to the nature of it or your past credit history with other merchant account providers. Often, high risk merchant accounts cost more than accounts that do not carry high risk. This is because account providers are taking a bigger risk by extending you an account and the credit that goes with it. However, having a merchant account is necessary so if you require a high risk merchant account that’s just part of the business model. In our high risk merchant accounts article we are going to discuss the reasons why you could be considered high risk, what types of businesses are considered high risk, and who offers high risk merchant accounts.

There are several reasons why a business is considered high risk. Some of the factors can be controlled by the owner of the business while some factors are out of their control. Due to the higher fees for high risk merchant accounts, it is best to do all you can to avoid needing a high risk account.  Here are the top reasons why your business will be considered high risk.

1) Your business sells products online. These type of businesses are often called eCommerce businesses and tend to have a lot of negative chargebacks. Often eCommerce businesses never see an actual credit card. They simply process the credit card number that the buyer put in. Hence, there are a lot of fraudulent charges made that result in chargebacks.

2) Your business falls into one of many categories that is high risk. As we mentioned in the opening paragraph of this high risk merchant account review, there are numerous businesses that are considered riskier than others. This is one of the most common reasons why you need a high risk merchant account. These businesses are considered this because they are in a tightly controlled industry or have a history of having a lot of fraudulent chargebacks. The types of high risk businesses often change but here are some types of businesses that are considered to be high risk:

• Amusement parks
• Adult entertainment
• Bail bondsmen
• Collection agencies
• CBD
• Pawn and coin shops
• Check cashing services and payday loans.
• Infomercials
• Insurance salespeople
• Door to door sales and multilevel marketing
• Mortgage servicers and brokers
• Online dating, escort and massage services
• Online jewelry sales
• Credit monitoring and repair businesses
• Cell phone providers and sellers
• Timeshare sales
• Investment opportunities
• Used car sales
• Gun sales
• High ticket sales items
• Home businesses
• Weight loss centers
• Travel agencies

All of these businesses are considered high risk because the clientele or even the business owners may run into trouble down the road when it comes to paying. High risk merchant account providers are taking on the risk of losing money when they agree to provide services for some of these types of businesses.

3) The business owner has poor credit or has had past problems with merchant accounts. This is perhaps the biggest reason that business owners can control. Let’s face it; getting a merchant account is similar to getting a credit card. You are asking for a third party to help cover your expenses and front you money. If you don’t repay it or live up to your end of the contract, your credit history starts to be effected.

Even if you don’t have poor credit or a high risk business, there are some instances in which you are considered a high risk to merchant account providers. If your past merchant account had a high number of chargebacks, or if you were late in paying your bills, or if your business did not meet the minimum charge amounts required by the merchant account, you might be considered high risk and have a hard time getting approved by a new merchant account provider. In these cases, you might have to pay higher fees in order to get service.

If at all expense you can avoid using a high risk merchant account you should. The main reason for that is your fees will be lower thus more money in your wallet! You can avoid falling into this category with the following actions:

Instead of offering money back to your customers which result in a chargeback, have a clear return policy of exchanges and store credit. This way, you do not have to issue a refund.

Make sure that you understand the terms and conditions of your merchant account agreement. Look for accounts that do not have a minimum transaction requirement. This means you don’t have to guarantee a set amount of credit card transactions per each month.

Look for a merchant account that is cost-efficient and that you know you can afford. If you are a start-up company, which also qualifies as an high risk business, try to work with a service provider that has special programs for new and small businesses. There are a lot of local banks out there that are small themselves and want to help the start-up businesses.

A high risk merchant account is going to cost more than other merchant accounts. You should be prepared for that. The high risk merchant account provider is going to charge you a higher transaction fee and possibly a monthly fee. Consider this a savings account for the provider. In case you start to have chargebacks or not pay your bill, they will have some additional funds to carry themselves on. Typically high risk merchant accounts are about 1-2% higher than traditional merchant accounts.

100 Best Merchant Accounts highly recommends both eMerchantBroker and Easy Pay Direct for high risk merchant accounts. Both offer very competitive prices and a fast approval time.