High-Risk Merchant Account: Everything You Need To Know

Running an online business can be so tricky due to the rampant increase in cybercrime and data breaches. In addition to that, there are naturally high-risk online businesses that require extra caution to run. If you are running an online business with a higher risk of chargebacks and you are in need of credit card transactions, you should have a high-risk merchant account.

But what is a high-risk merchant account? Who needs it? What are its ups and downs? Keep reading this article to get answers to all these questions.

What is a high-risk merchant account?

A high-risk merchant account is a payment processing account for businesses that are majorly considered high-risk to the banks. Generally, a high-risk business is more prone to chargebacks. They also require higher fees for merchant services.

If your business has a high potential of chargebacks, or it has a history of several chargebacks and refunds, the chances of the bank putting a rolling reserve on your account are pretty higher. A reserve is the amount of money that will cover the possibility of fraud or chargeback.

Who needs a high-risk merchant account?

If you run a high-risk business, you must have a high-risk merchant account. One of the top examples of a high-risk business is the travel industry. That’s because there are various factors that may lead to cancellations. This normally ends up with a several refunds and customers who file chargeback. Other high-risk businesses include Forex trading, gambling, brokering, banned illegal goods & services, auctions, etc.

The pros and cons of a high-risk merchant account

Some of the benefits of high-risk merchant account include

  1. Global coverage

One of the main benefits of having a high-merchant account is that it allows business owners to accept transactions in different currencies and sell to clients in other countries considered to be low risk and are considered to be compliant with most governance, risk, and compliance processes. This ultimately, makes it easier for business owners to access a global market.

  1. Increased profits

 Having access to a wider market means that you will increase your sales. An increase in sales translates to increased profits.

  1. High chargeback protection

With a high-risk merchant, you have higher chances of keeping your account in good shape. It is also pretty easier to keep a high-risk merchant account in an up and running condition.

  1. Expansion of your business

If you have a high-risk merchant account, you can even sell products and services that are not allowed because of their risk nature. This, in the end, gives your business more long-term growth opportunities.

The only main downside of a high-risk merchant account is that business owners need to pay higher fees and processing rates. The high-risk merchant account fees may cost twice the amount that applies to low-risk merchants.

Final thoughts

From the look of things, you can see that there are plenty of reasons why high-risk businesses need to have high-risk merchant accounts. It simplifies the payment process as well as offers a more reliable payment platform.

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