First, What is a High Risk Merchant Account?
And why do I need one?
Think of merchant accounts like life insurance. If you’re young, healthy and don’t engage in overtly risky activities or have a dangerous job, you’ll have the lowest rates and require a standard policy.
But if you’re older, a lifetime smoker and ride motorcycles and work on an oil platform, you’d have an expensive and perhaps restrictive life insurance policy, and perhaps even a specialized life insurance agent.
Merchant accounts and life insurance are based significantly on risky how risky it would be to do business with you. Are you a typical vanilla operation, or are you on the fringe of what’s considered safe or acceptable to society. Do you sell worms or weapons?
And so it is with credit card processing. You’re either a low risk or a high risk operation, and everything from your pricing, banks and contracts will be in accord with that risk profile.
But a high risk designation is not only dependent on what you sell. It can be how you sell it (online, in person or on the phone), and how you structure your return policies, and how many (if any) previous customers have made chargebacks and contested a purchase from you in the past.
You’ll also find your credit history is fair game, and so is the history of your previous businesses. These can all combine to create a low or high risk profile, and your merchant account and payment processing will all be part of the equation.