Merchant Account What Is High And What Is Low.
When an account is approved by a financial institution or a bank to receive payment from either debit or credit cards it is referred to a merchant account. The customer that make use of these cards either uses online or POS as a mode of payment. However, some businesses are considered by the financial institutions to be risky depending on their nature. If a merchants business falls under the category of extended risk, it is always difficult obtaining a merchant account. Some of the most common reasons why accounts are considered to be high risk merchant accounts are stated as follows
Factors That Can Create Challenges In The Approval Of The Merchant Account.
- When the service of a merchant has a longer chargeback liability period.
- When the class of business of a merchant has a history of high chargebacks, the banks consider that business as a liability and categories it as a high risk business for credit card processing.
- When an industry is considered offensive to the society, it is also considered as a high-risk account. e.g of this type of account is the porn industry.
- When a merchant has a little credit card processing history.
- When merchant sales are seasonal.
- When a merchant sells products to countries that have a history of high levels of fraud.
- When a merchant process more than 2 to 3 currencies.
- The business that has been blacklisted by credit card associations on the TMF or MATCH lists.
- When the guarantor of a business has a poor personal credit.
- When products or services of a business are considered to be offensive to some banks.
- When a business depends on future customers like booking hotel or airline tickets.
- When a business sells expensive items.
- When a business falls within categories of Industries with historical high chargebacks.
Businesses That Attract More Risk On The Merchant Account
Some of the businesses considered to be high risk are listed below
- Bail bonds
- Adult Ecommerce
- Travel and tourism agencies
- Bad Debt Service
- Insurance companies
- Electronics sold online
- Fortune telling
- Dating service
- Online Auctions
- Online Gambling
- Marijuana Sales
- Software download
Opening Of A Merchant Account
It can be difficult for high-risk business to find a merchant account provider because most financial service providers follow strict guidelines for approving a business’s merchant account services. Again, this is caused by any number or combination of the factors discussed above.
Accepting Credit Cars With Merchant Accounts – Associated Risks.
Most businesses are considered successful today just because they accept credit or debit cards as a form of payment. A Business that don’t accept card mode of payment is considered to loss 45 to 55% customers annually because most customers find it easy and more convenient to pay with cards. But sadly, most businesses lose money when some customers pay for goods and services with stolen cards. Ordinarily, the issuing bank will be on the side of the original card holder and will not release funds to the merchant.