High Risk Merchant Accounts
While it is never a problem for land-based or online businesses with
lower risk contents to procure own account rather easily, the high risk
merchants are always denied the privilege of owning a high risk
merchant account by majority of the domestic merchant account
providers. In order to receive credit card payments, the
merchants are required to maintain a merchant account that can
facilitate easy processing of credit cards and other such instruments.
These merchant accounts are allotted by designated domestic banks,
credit card processors and other merchant account providers.
High Risk Merchant Categories
There are a number of online businesses run by apparently high risk
merchants that are extremely risk-prone due to various reasons
including high sales volumes and the resultant susceptibility to fraud.
Such high risk merchants, even though making enormous profits,
encounter considerable problems in accepting online payments due to
non-availability of high risk merchant accounts. Any businesses with
one or more of the following characteristics can be categorized as a
high risk merchant business:
- The business is not registered as required by law.
- The
vendor or his business is blacklisted by merchant account
providers/Credit Card Processing companies for reasons of bankruptcy,
fraudulent dealings or etc.
- The merchant’s credit history is not consistent.
- The
merchant runs any business such as telemarketing, travel, online
pharmacy, gaming, ticketing, entertainment, downloadable software, etc.
- The
business generates large volumes of sales resulting in large number of
transactions. Such a situation is likely to lead to instances of fraud
and term the vendor as a high risk merchant.
- The
business is small with very insignificant volumes of sales and fewer
numbers of transactions. Such a business may not be able to afford the
heavy expenses involved with purchase of fraud screening software/tools
and other miscellaneous features as well as making payments required
towards third party processor fees.
Who Are the High Risk Merchants?
Vendors engaged in the following businesses online are classified as high risk merchants:
- Adult entertainment.
- Travel.
- Pharmacy.
- Online casinos/gaming merchants.
- Telemarketing merchants.
- Tobacco and cigarettes.
- Replica products.
- Online auctions and debt services.
- E-wallet and E-cash.
- ISP and hosting services.
- Online dating services.
The
above businesses do not make all the vendors exclusively high risk
merchants. The degree of ‘high risk’ is bound to vary from one high
risk merchant to the other depending on a host of factors. |
