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What You Can Expect as a High Risk Merchant

31 July 2014 No Comment

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You are considered to be a high risk merchant if your business falls within any of the following categories:

adult products or services 
alcohol, tobacco, legalized drugs (such as Cannabis), or firearms 
bankruptcy attorneys 
check cashing, payday, and title loans 
collection agencies and commercial debt collectors 
repossession companies 
private investigator 
online-only or 1-800 companies 


Because these types of industries often produce a large volume of sales and fast revenue, statistically they also result in a significant amount of credit card disputes – including accusations of fraud, and bank-issued chargebacks and refunds. For a merchant account provider, this means that there is more hassle and loss of money involved with providing credit card processing services to these types of merchants. Subsequently, many merchant account providers will not approve accounts for high risk merchants.

Fortunately for high risk companies, not being approved for a traditional merchant account does not mean that credit cards and debit cards cannot be accepted. Instead, these companies should turn to high risk merchant account providers. High risk providers understand the financial and potential legal risks associated with handling credit card transactions for their clients. From a high risk provider’s perspective, the higher risk simply means having stricter guidelines for the merchants to follow. For the merchants, this means having to toe the line in terms of handling customers and any transactions, as well as the very real possibility of higher transaction rates, as well as monthly fees, and quite possibly the signing of a fairly lengthy contract.

If you are a high risk merchant, you can expect the following requirements from your merchant account provider:

firm contract with little room for negotiating
significantly higher setup fee than what is usually charged for a standard merchant
higher per-transaction percentage-based fee
more paperwork


While this article may initially deter some high risk merchants from accepting credit cards, consider that roughly 80 percent of consumers use credit cards for common transactions. You stand to lose a significant amount by not accepting credit cards from your customers, so it makes more sense to shop around and find a great high risk merchant provider.

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