A merchant account is a type of account, approved by a banker in tech industry, which allows businesses to accept credit or debit card payment from their customers. However, the type of business applying for a merchant account may affect the level of risk associated with that merchant account. More and more companies are applying for a High Risk Merchant Account because of the nature of their business. Let’s look at the most common reasons accounts can be high risk and what are the issues associated with opening this type of account. Merchants are usually considered high risk for one of the following reasons:
1) Worst-case scenario of taking a loss on your account, due to your personal credit or company financials not able to support the sales volume that you are applying for
2) Your service or product has a longer charge back liability period. If you are offering annual memberships, customers have 18 months to issue a charge back (6 months from the end of the service date)
3) You are in an industry that has a history of high-charge backs. The bank feels they will spend too many resources managing your account, and eventually have to turn you off regardless if/when you exceed charge back thresholds
4) The account has a “reputational” risk, such as the adult industry
5) If you are on the TMF or MATCH list
If a merchant is considered high risk, they will have a more difficult time obtaining a merchant account It can also be perplexing for a High Risk Payment Gateways to find a merchant account provider because most financial service providers follow stringent guide lines for approving a business’s merchant account services.
Most of the times it is seen that High Risk Merchants Account deal with bad credit score. Many a times such merchants are not entertained in various banks or firms who deal in merchant accounts. They are avoided all the way because of the score they carry. However, eCheck Payment gateway is one of the solutions for such merchants. There are several things that such high risk merchants can adopt!