Defining the High Risk Merchant Account

The simplest way of defining a high risk merchant account would be one in which the commodity offered could involve the ease of credit card fraud or the short term turnover of the business in which you decide to participate. These accounts could be one located in one country but have sales nationwide. Or the volume of your business could have such a high volume of trade that the number of credit card users would be more likely to create a problem with fraud or cards that have expired. Business dealing in travel, debt collection, auto rental, and bail bond, are all considered high risk. These are just a few examples leading to the necessity of a higher risk merchant account. high risk merchant account shopify

These problems in turn cause banks that handle credit and debit cards a much higher than normal amount of work in completing your company’s transaction. Due to this, the volume of high risk merchant providers is either limited due to what your business has to offer or the rates being charged for your account will far exceed the norm. The better your credit history is, the better your offer of terms may be.

The high risk merchant account provider has a lot to take into consideration. With a regular merchant account, your bank acts as the middleman in collecting your funds and depositing them into your account. A small fee is charged for this service. With a higher risk merchant account, the bank involved needs to be account for the integrity of the funds and keep in mind that they could be left the responsible party. The credit card being used could be fraudulent or stolen and the debit card could have insufficient funds,

Some banks will tailor these types of accounts to specifically meet your needs or due to a bad credit history on your part, will simply refuse to do business with you. Although the merchant offering you a high risk account may tout his service as having ‘the lowest rates,’ be assured that you are going to pay a considerable amount more for this service. Many high risk merchant accounts will charge a set-up fee that can range from a few hundred dollars to nearly a thousand dollars. The amount they will charge per dollar, or their percentage rate charge, will also exceed the norm. Some may add handling fees.

The best advice for the retailer requiring the services of a high risk merchant account is to shop around. Do not accept the first offer you happen on. The rates will differ immensely.