What Is A High Risk Merchant Account?

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What is a High Risk Merchant Account ?

What Is A High-Risk Merchant Account?

A High-Risk Merchant Account is pretty much like a normal Merchant account which allows the merchant to accept payments from buyers. There is definitely a slight variation between low, Mid and high-risk merchant account. The explanation of the same is mentioned below.

What Does Risk Means In Payment Processing?

  • The Possibility of Fraud
  • The Possibility of the Buyer asking for a money back because of multiple factors mentioned below.
    • Product Not Delivered
    • Product Delivered of inferior quality
    • Product Lost or Stolen
    • Fraud from the Merchant
    • Risky Products or Services
    • Miscoding or Prohibited Industry or Geo Location of the Merchant

Low-Risk Merchant Account 

This type of merchant accounts are the most loved accounts of almost every financial institution. These industries hardly attract any fraud and charge-backs. Examples of the same can be Online Toy Store, Online Garments Store, and others.

Mid Risk Merchant Account

Mid Risk accounts are the accounts that do not attract a lot of fraud transactions but do attract high refund. Examples of the same can be Take Away Restaurants that take online orders. You never know when the guests won’t visit the host and the host will call the restaurant and ask for a cancellation.

High-Risk Merchant Account

This type of Industry is most risky in terms of Returns, Chargebacks, Frauds and Legal Issues. This does not mean that High-Risk Merchants will always be told NO by the Financial Institution of the Underwriting Payment Services provider. There are Good and Bad People Everywhere. All five fingers can’t be the same.

Some International Processors for Credit Debit Processing or Echeck processing may say yes to few of the industries. It depends upon a few factors like

  • Merchants Profile
  • Processing History
  • Results of the Background Verification Tool run by the PSP.
Bankim Chandra
Bankim Chandra
Bankim Chandra is a Merchant Account consultant. He works with merchants globally and helps businesses in getting reliable payment processing solution. He writes extensively on the internet about Payment Gateways, Credit Card Processing, Echeck Processing, Chargeback Alerts, ACH and Business Funding.