What Is a High-risk Merchant Account and Do You Qualify for One

Did you know, why your business is classified as high-risk and why you need a high-risk merchant account?

In today’s life, most customers want to pay either by credit card or debit card. To accept funds made by the customers you need a suitable fintech service provider. A service provider processes the fund and deposits it into your bank account. Every time, when the transaction occurs a merchant has to pay the transaction fees. But, it is not necessary that all the enterprises have to pay the same fees. This is because fintech service providers make two categories for the businesses –

  • Low-risk merchant accounts
  • High-risk merchant accounts

As a merchant when you apply to open a merchant account, the payment service provider either categorizes you as low-risk or high-risk, depending on your business nature. A business that has high-risk nature needs a high-risk merchant account.

Let’s discuss high-risk merchant accounts in more detail.

What is a high-risk merchant account?

There are no certain rules in the fintech industries that determine the risk factors. Every bank and financial service provider has its own rules. There is a possibility that your business may be considered as high risk by some banks but not by some other payment service providers.

When your selected fintech services determine you to be at a greater-than-average risk of fraud or chargeback, you will be classified as a high-risk merchant account.

There are many fintech services provider available who does not serve high-risk businesses. In general, low-risk merchant account has to pay low processing fees per transaction whereas high-risk business has to pay higher fees. Also high-risk business has many restrictions.

What are the criteria to decide whether your business is considered high-risk or not?

Businesses from certain industries are automatically considered high-risk industries. Examples of high-risk industries are –

  • e-cigarettes
  • Stun guns and tasers
  • Credit repaid
  • Adult products/services
  • Tech-supports
  • Search Engine Optimization(SEO)services
  • Gaming Industries
  • Online casino
  • Subscription-based industries
  • Travel agency
  • Forex Trading
  • Online dating

These are some of the industries that are labeled as high-risk. Along with these, there are many more factors that could result in labeling high-risk.

  • If you have a poor credit card score.
  • If you are a new entrant without any established financial history.
  • If you are selling controversial products.
  • If you have a global business or your business depends on international sales.
  • If your business is highly regulated by legislation or governments.
  • If your business’s financial state is not good.
  • If you have a history of chargebacks and frauds.
  • If your business address varies from where your business is established.
  • If you are selling particularly expensive products.

What happens if your business is labeled as a high-risk business?

As I explained above, each payment service provider has its criteria to determine whether the business is considered high-risk or not. So, if one service provider labeled you as high-risk, it does not mean that others also.

In case, if your business is labeled as high-risk, then –

  • You have to pay a higher fee per transaction as compared to the low-risk business.
  • With your payment service provider, you have to sign a long-term contract.
  • Whenever your customer request chargeback, you have to pay the higher chargeback fees.
  • As a high-risk merchant, you should also accept that if your service provider finds any unusual processing patterns they can freeze or terminate your accounts.
  • You should also agree to automatic contract renewals.
  • As a merchant, you have to also pay for the early termination fees.
  • You have to allow your payment service provider to reserve some funds from your sales to protect against fraud.

Why ought to choose Amald as your fintech service provider?

As there are too many fintech services providers available for high-risk businesses but most of them have higher fees and many restrictions. That’s why we suggest you go with the Amald.

Amald is one of the leading fintech service providers. Its service is available worldwide. This service provider completely understands the needs of the high-risk business as it has experience in dealing with the high-risk business.

Security is the top priority for Amald. It offers the most advanced technology and latest security standard with anti-fraud and anti-chargeback tools. This service provider also has many features which help you to run your high-risk business smoothly without any headaches. It offers you various payment modes and allows you to accept payment in various currencies.

We completely understand your business requirements and offer the best solution. We have deals with many acquiring banks to offer the best possible service for our clients.

Final thoughts –

Once your business is considered high-risk, you have to go with the high-risk merchant account. A high-risk merchant account has many limitations and also has to pay higher fees per transaction.

But, with a reliable high-risk payment gateway processor such as amald, you can run your high-risk business in a hassle-free manner. It offers you a high level of security and also helps you to minimize the risk of fraud and chargebacks. To know more about the fintech service provider Amald you can contact our experts. They can help you to understand your business nature and offer you the best possible solution according to your business needs.

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