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Best High Risk Merchant Account: What And Why Do You Need It?

Every business merchant now wants to switch their business at an online platform. In the process of approval for a credit card solution, has your application ever got rejected?; this might be because of your business category. It may be because you have higher chargebacks, have large ticket sales, and like that. One should understand the actual difference between low risk and a best high risk merchant account before applying a credit card processing solution through a provider. Let’s dig more into this!

What Is The Actual Need For The Best High Risk Merchant Account?

High-risk merchant services consist of a payment processing account that is specially designed for the businesses which are considered to be as highly risky for a bank. Generally, a high risk business is more prone to the occurrence of chargebacks. That is also a reason that they come with the requirement for paying higher fees for merchant account services in comparison to other accounts that are under the low risk category. Suppose a business history shows many chargebacks and refunds or comes with a high potential of chargebacks. The bank or financial institution may put a rolling reserve on that best high risk merchant services account. It is the fixed percentage amount of held funds that will be utilized for the possibility of chargebacks or fraud.

What Is The Identification For A Low Risk Merchant Account And High Risk Merchant Account?

The merchant account is divided into two categories: low-risk merchant account and a best high risk merchant account.
A Low Risk Merchant Account: The criteria for a low-risk merchant account may vary from a processor to another one. But the common one is as follows:

  • Having less processing than 20,000 dollars processed monthly
  • Having an average of credit card transactions less than 500 dollars
  • Zero or very low chargeback ratio
  • Mostly the countries in which a business operates are to be considered low risk are European Union countries,
  • Canada, USA, Japan, and Australia
  • Having minimal returns

Best High Risk Merchant Account: The primary factor that makes a business come under the high-risk business category is the industry reputation and the processing history, which may include a more significant number of chargebacks. Some of the general criteria are as follows:

  • Having sales volume more than $20,000 per month
  • Having an average credit card transaction amount higher than the 500 dollars
  • A business that sells goods and services to the countries known for high levels of fraud
  • Having a bad business credit history and a large number of chargebacks.
Who Needs A Best High Risk Merchant Account?

As we already discussed, there can be several reasons for a business to be considered under the high-risk category, and thus it requires to have a high-risk merchant service to perform credit card processing. But there is some list of business industries that generally come under the high-risk category by most of the banks and financial institutions. Some of them are as follows:

  • Antiques
  • Attorney referral services
  • All adult and sexually-oriented or pornographic businesses: for example, escort services, adult bookstores,
  • adult telephone conversations, online adult membership, adult paraphernalia or matchmaker services and toys
  • Business opportunities
  • Coins, collectable currency, or autographed collectables
  • Chain letters
  • Banned / illegal goods & services
  • Dating
  • Airlines or airplane charters
  • Annual contracts
  • Check cashing services
  • Brokering
  • Cigarettes, e-cigarettes, CBD or Vape shops
  • Automotive brokers
  • Auctions
  • Collection agencies
  • Debt collection services
  • Direct response marketers
  • Bankruptcy attorneys
  • Car parts
  • Drug paraphernalia
  • Coupons or rewards-points programs
  • Credit protection, counselling, or debt repair services
  • Casinos, gambling or gaming
  • Sub-acquiring / merchant aggregation
  • SEO services
  • Replica products like handbags, wallets, watches, sunglasses, etc.
  • Sports forecasting or odds-making/betting
  • Social networking sites
  • Self-defense items like pepper spray, etc.
  • Smartphones – sale, resale & spare parts
  • Modelling or talent agencies
  • Money transfer
  • Medical care programs
  • Merchants on the TMF (Terminated Merchant File) or in the MATCH List
  • Merchants with poor credit
  • Membership based companies

For more information on how to apply for the best high risk merchant account, you can mail us at [email protected].

Recommended Reading

https://quadrapay.com/high-risk-merchant-services/

https://www.baselgovernance.org/sites/default/files/2019-01/Doingbusinessinhighriskcountries.pdf