What is a High-Risk Merchant Account?
As a business owner, you are always required to be ready for two risks, either profit or loss. A business, however, runs to make a profit. This is why you find many business owners putting an effort to ensure a business satisfies its clients.
It is however hard to satisfy all client needs as different people have different preference needs. You will find some clients return an item because they do not like it, it does not serve them well, or it is faulty. Such instances are usual in a business. Hence, the emergence of a high-risk merchant account.
What is a high-risk merchant account? This is an account given to businesses with very high rates of chargebacks from buyers. It works to cover up the extra expenses that are incurred by a merchant processing provider. There are other reasons why your company can be termed as a high-risk merchant account. They include:
High transaction volume
Huge transactions within a short time if it is unusual for a business, it attracts attention. Businesses, therefore, need to register themselves in advance if they plan on making such huge transactions. If not so, merchant companies might review the company as a fraud and have it under a high-risk merchant account.
Making international payments
If let’s say, your company operated worldwide to people in other countries other than your home county, you will be put under review to determine if your business is legit. International transactions mean different banks and money agencies are involved. This raises a brow for different companies. However, this is something you cannot avoid, you can use part of your profit to cater for the extra expenses incurred.
Lack of track records
If your business has been dormant for a long time or has very minimal transactions, you will be placed under a high-risk merchant account. Upcoming businesses are often placed in this category, but when they advance, changes are made in their accounts.
High-risk industries
These are industries that are known to put the lives of their clients on a spot. For examples, gambling, the adult content industry, debt collection, and travel agencies. Companies such as these are known to either have bad reviews if their products do not satisfy a larger part of their clients, or their goods are often returned. Usually, this is an agreement companies come to, most agree their products are high risk and do not have an issue paying for the extra charges required.
Having a high-risk merchant account is not negative. It has benefits to the business such as:
– Global operation coverage, allows you to make transactions using different currencies and have clients all over the world.
– Chargeback protection, a client with the habit of returning items will have their accounts suspended or even restricted from returning the items purchased.
– With increased profit margins, here you can earn more money from different high-risk businesses that generate money quickly for your business.
In conclusion, businesses still operate effectively even when incurring extra charges of a high-risk merchant account.
