What is High Risk Merchant Account?

Is your business classified as high risk?

When you try to find out about the Merchant account, you will certainly get the term "high-risk merchant account". Here you learn more about the nature of risks involved and to better understand the business of credit and debit card processing.

Are you AT RISK?

The processor or payment acquirer will settle all processed sales (minus fees) typically within a couple of days or a week after they take place. But here is the twist - We already know about every cardholder has the right to dispute a transaction within 180 days of it taking place, As they contacting their card issuer bank and filing a complaint of non-delivery or dissatisfaction.

For Example- In the case of a longer service length, this could mean 180 days after service has been fully provided/completed, which further extends the time the window for charge-backs The customer is able to file a chargeback request at any timeframe. In this case, the provider will already settle the captured sales to the merchant's bank account, but the cardholder file a chargeback.

Here, The provider is therefore at risk in case of disputes and merchants not being able to repay the possible negative balance. And this possibility is very common in this Business type and other different factors determine the risk scale.

So, the provider needs to be sure that products or services are delivered by the merchant to all clients at a decent time so that all parties are satisfied. So, this is what is meant by a high-risk merchant account - when the payment provider finds your business particularly risky for them. There are various reasons why these cans happened.

ARE YOU LISTED IN HIGH RISK?

There are many reasons your business could be considered high risk, and, of course, there are always different views on what is considered a the risk for a particular acquiring bank or payment provider. However, with every provider, there are standard guidelines adhered to when assessing how risky you are for them. 

These are the main reasons you may be given a high-risk merchant account are:

• Chargebacks History: It is when the issuing bank initiates the return of funds to the cardholder based on their complaint/dispute.

• Returns and Refunds: Frequent refunds may also a clause to put you under High risk because, frequent refunds create a doubt to payments companies, that the merchants are doing something fishy and grant your business a high-risk status.

• Product Delivery: If the timeframe for delivering your product or service to the consumer is too long, it may also go wrong and could make your business risk for the provider.

• Industry Reputation: Bad image of a company may drop it into high risk due to a higher ratio of dissatisfaction, fraudulent transactions, or being targeted by fraudsters?

• Low Credit Score: If your credit score is too low you may be given a high-risk status, mainly because it will be harder for you to repay any negative balance.

• MOTO Transactions: These kinds of transactions always creates higher risk, If your business takes transactions over the phone (through a virtual terminal), without the card being physically present or having a client make a purchase in person, THen, there is a higher chance that the cardholder is unaware of all details.

• Brand New Business: As a new business, however, you don't have any credit card processing history, which automatically renders your business an uncertain risk.

• Automated Billing: An automated billing or recurring billing may create a have refunds or CB complaint against the Merchants because many times the consumer could dispute the charge, not remembering they signed up for your business.

• MATCH listing: stand for MasterCard alert for a merchant who was already terminated in the past.

• High volume: If your business processing lots of transactions, then it is also high risk because the overall financial risks are higher.

These are various reasons that could explain why your business is high-risk. It’s important that you find a provider that is willing to work with you and your business. Transactway's team of experts will work closely with you to find the best possible solution. CONTACT US today and we will honestly assess your high-risk business and help you setup a secure a long-term merchant account solution.

WHAT TO EXPECT?

There isn't much of a difference between a regular merchant account and a high-risk account. The only variation is that the terms of pay-out and pricing may be slightly in favour of the provider. You may find it difficult to find a provider who will accept your business. Be careful to read and consider the terms and rates with a high-risk account, as they will be stricter than a typical merchant account.

WHAT CAN YOU DO?

Be sure you read your contract thoroughly. Unfortunately, there are still several unethical high-risk payment providers around the world looking to exploit your business. Check for hidden fees and termination terms, and keep in mind that many high-risk processors will want a higher rolling reserve and will settle to your bank account very late. MerchantScout’s team of experts team has over 10 years of experience working with many well-established banks and processors around the world, providing merchants with the very best merchant account solutions.

WHAT ARE HIGH RISK INDUSTRIES?

Typical high risk business categories are:

· Adult Dating

· Auto Rental

· Bitcoin

· Escort Services

· Drug Stores

· Pharmacy

· Electronics

· Travel

· Gaming

· Gambling

· Tobacco

· Insurance

· Infomercials

· Multi-Level Marketing

· Ticketing Agencies

· Nutraceutical

· Software

· Telemarketing

· Financial Services

· Jewelry

Does your business fall into any of these categories?

MATCH LISTING

TMF (Terminated Merchant File), basically match is a system created and managed by MasterCard. The acquirer has a database to identify the information about businesses that have had previous processing agreements terminated. So, all the providers are using the system to screen applicants, looking for any history of termination in the past.

HOW DID I GET MATCH(ED)?

There are many reasons why your company may be on the match list. Master card database information remains in the match system for at least five years.

These reasons for getting put on the list include:

• Huge chargebacks

• Unethical or unapproved products, services, urls

• Money laundering

• Common point of purchase

• Violating payments standards

• Many fraud conviction

• Bankruptcy

Why Transactway?

Transactway provides high-risk merchant accounts without the hasty process! We arrange rates as low as 4% through solid and safe solutions, no matter where your business is geographically located. With a wide network of over 30 payment providers and tested acquiring banks, we enable your business to obtain a merchant facility and reach all potential customers! We know your business is important to you. That’s why it's important to us.