What Is A High Risk Merchant Account?
In layman’s terms, a high risk merchant account is a type of payment processing method that has been specially designed for business enterprises that are regarded as high risk by banks. Examples include software venders, cosmetic surgeons and investment brokers amongst others. As such, these businesses have to pay more high risk merchant account providers for tech support for merchant services compared to other businesses using similar services.
The flip side of a high risk merchant account is that it functions increases the operating costs of a business thus reducing their bottom line. Having seen this as an untapped market, there are companies that have dedicated their services to working hand in hand with risky merchants so as to provide them with inexpensive rates. This has enabled a number of businesses that once found the market unfavorable due to the high fees charged by banks to find a level playing field. There are hundreds of businesses that are today labeled as risky business as a result of the work they are involved in.
The following are different types of high risks businesses:
– Adult businesses.
– Software vendors.
– Investment brokers.
– Travel agencies.
– Legal gambling.
– Insurance brokers.
– Cosmetic surgeons.
Due to the nature of their services, they pose certain risks for banks as well as payment processors and as such are compelled to register their businesses as risky merchant accounts. The fees levied in these types of accounts are slightly higher in comparison to normal merchant accounts. In the banking sector, merchant accounts are referred to as a form of bank account that enables business owners to accept payments for goods and services from clients via credit cards and debit cards. The main reason why these businesses are regarded as risky is because there are concerns in relation to the reliability of the finances. In addition, the bank could be on the receiving end in case there is an issue arising with the transaction.