All You Need To Know About High-Risk Merchant Accounts

All You Need To Know About High-Risk Merchant Accounts

High-risk merchant accounts are credit card processing accounts where the processing banks deem the merchant as high-risk.

Why Do You Need To Apply For a Merchant Account?

In a simple way, you need to obtain a merchant account for your business to accept and process both credit & debit cards.

Reasons Your Business Can Be Considered High Risk

The processing banks can categorize your business as high risk due to various reasons. Some of them are:

  • If you are in a sector that has a history of high-chargebacks.
  • The business owner’s low credit score.
  • The number of chargebacks that you face during the normal business operations.
  • A brand new business with no past credit card processing that is non-traditional
  • When the business sales include future deliverable services or products such as event tickets or hotel reservations.
  • The business is dealing with customers who are in a different country from where its base of operation is.
  • The business has a reputational risk, for example, the adult industry.
  • The company may be competing in a fresh or untested industry
  • The services or goods that the business deals with are considered to be forbidden by some banks but not all of them.
  • The products or services are sold in a card-not-present manner where fraud and/or chargebacks may occur

For instance, if you are in the travel business, your company can be categorized as high risk because of the possibility of several cancellations. Such businesses are prone to external factors like changes in weather or modifications in the customer plans. As a result, the merchant gets chargebacks that are higher than the regular amount and, therefore, is reckoned as a high-risk business.

What Do You Do When Your Business is Deemed High Risk?

In case the processing banks classify your business as high risk, there is no need for alarm. You can still obtain credit card processing for the company and continue with normal operations.  All you need to do is apply for a high-risk merchant account.  Today, numerous companies apply for high-risk merchant account due to the nature of the operations in their business. The banks may ask you to give additional background information or provide business financials. Despite all these extra precautions, you can still accept credit cards like all other business. Other banks may ask for a processing rate that is higher than usual as they are undertaking some additional risk. Another option that banks have is to put a reserve on the credit card processing of your business. With merchant account providers like Maverick BankCard, our team understands the complexities between different non-traditional businesses and we have the banks required to secure long-term processing for any legal business that may be classified “high-risk”. Click here to view our high-risk page and you may also check read more at our high-risk website: 

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