High Risk Merchant Account: – Info, Pros & Cons of It

The business merchant accounts that are considered as bearing high risk based on payment, by the bank, is known as a high risk merchant account. The charges for operating a high risk account is normally higher than the normal merchant accounts as there is much risk of payments and fraudulent.

If you are the owner of a business which falls under the category of high risk merchants, then you have to run a high risk merchant account which provides you services of banking for business transactions. Business accounts are divided into two categories by bank i.e. high risk merchant account and low risk business account. 

Some major differences between high and low risk merchant accounts are as follows:-

  1. On the basis of chargeback: – Chargeback is low or zero in case of low-risk merchant profile whereas, in the case of ahigh-risk merchant account,the same is quite excessive.
  2. The average of the transactions of credit cards is not above $500 in the case of low-risk merchants. On the other hand, the average of the transactions of credit card payments is more than $500.
  3. The total sale of the low-risk merchant for a month is generally not above $20000, but in the case of high-risk merchants, the sale can be much higher than $20000.
  4. If the economical and overall environment of the country in which business prevails is sound or stable, that means the business bears the low risk. On the contrary, if a business works in a country with higher risk, its consequences will be on business too.
  5. The nature of the business also plays a major role in deciding whether a merchant is running a high-risk business or low-risk business. Businesses like gambling, stock exchange, online gaming, advance booking, tour n travels, etc are mostly high-risk merchants.

How high risk merchant account is beneficial for high risk bearing merchants?

High-risk merchant account helps in expanding your business as you can accept money in any form of currency that means you can expand your business out of your country. The services from the high risk credit card processors are quite crucial for satisfying the consumers of high-risk merchants. The more online and offline banking services you will provide to your customers, the more customers will be attached to you. High-risk accounts help you in managing and processing your payments easily that helps you in focusing on selling in more of the quantity, thus it also increases the profit of the business. In the high-risk merchant accounts, one gets higher chargeback than others. You will be secured with high-security technology payment methods by the high-risk credit card processors.

Along with the benefits, there are also some drawbacks of high risk account:-

For running a high-risk account, one has to pay higher fees and charges against their services.  Certainly, the processors charge excessive fees for chargebacks. Processing fees for credit card payments are also higher than usual. You also got to maintain a compulsory reserve of a specific amount with the bank for acquiring a high-risk merchant account.

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