Introduction
One of the things that you will know about merchant accounts is that, it lets business process credit card including other online payments. A high-risk merchant account is also known as a bank account, which is made for businesses considered to be at a higher risk of issues like frauds and chargebacks. This categorization can be because of its financial history, nature of business, or the industry in which it works. The possibility for high ticket sales & transactions without card can also leverage the classification. You can also look here for more details on, stripe high risk business & broaden your horizons on the same.
High Fees in High-Risk Merchant Account
One of the most important things that you will know about high-risk merchant account is that, it comes with a higher fees and stringent contract terms, compared with standard merchant accounts because the fiscal institutions providing these accounts take more risk. It is possible that the term, ‘high-risk’ can hold negative meaning, many businesses are there that operate in places or industries that are typically risky. And, besides that, its crucial for the economic environment to have merchant account providers who aid to this business. Let’s look at some of the characteristics of high-risk business.
Industry Reputation and High Chargeback Rates
There are some industries that are quoted as high risk due to their reputation for reasons such as, refunds, high-level of frauds, chargebacks and so on. Moreover, industries like adult entertainment, pharmaceuticals, gambling and travel are most of the time classified as high risk. Then, there is high- chargeback rates. Chargebacks mostly occur when there is dispute with the customer regarding transactions. A business that most of the time faces chargebacks is seen as a liability to merchant service providers and is mostly considered high-risk. Then, comes the international sales, besides all of that, business that has large number of international transactions, they are mostly considered high-risk, for doing business with other countries who are at high risk of fraud.
High Ticket Sales & Bad Credit History
Besides all of that, businesses that mostly process transactions of high value i.e. $100 or more are at a high risk of chargebacks and fraud & they are likely to be known as high-risk. Next and the most common one is bad credit history. Financial stability is a pivotal factor in determining a business risk level & having a bad credit history is a classification of high-risk. Apart from that, are subscription-based services in which the businesses that work on recurring payment or subscription model are high risk because these are the kinds of payments which are more likely to have chargebacks. Fraud risk, regulatory risk, new business or unestablished business are some of the important characteristics of the same.
