What does “high risk merchant account” mean?
Simply put, a high risk merchant account is a credit card processing account for a merchant where the merchant is classified as “high risk” by the credit card processing bank. In other words, if your business is classified as a high risk business then the merchant account you get for credit card processing is a high risk merchant account. Your business can get classified as high risk because of the chargebacks you have to face in the regular course of business or your industry type. For example, a travel or tours business can be considered as a high risk business because there are a lot of cancellations that can occur. Businesses related to travel have unpredictable future; they are affected by external factors like weather and people’s plans. And that is why a travel merchant can receive more than a regular amount of chargebacks and be seen as a high risk business.
Why can your business be considered high risk?
There are various reasons as to why your business can be categorized as high risk. Typically it is just because of your business-type or industry. But it can also be because of your low credit score. It can also be because yours is a totally new business with no history of merchant credit card processing. Your business might be in an unproven and a new industry. Also, it can be because your business has costumers outside the country where the business is situated. Your customers might not recognize the credit card charge on their statement (which frequently happens in the case of adult and some other businesses). In that case, one tip is to let your customers know beforehand what will appear in the statement description and to make adjustments accordingly. If your business has had credit card processing applications cancelled in the past and been placed on a list of businesses getting numerous chargebacks, then your business can be considered high risk.
However, there are many reliable payment processors that provide high risk business or high risk merchant account credit card processing services. If you dig in a little then you can find the right credit card processor for your high risk business easily.