High-Risk Merchant Accounts are needed by high-risk industries. In the past, many banks and processing companies refused to do business with merchants in these categories. Nowadays there are services that offer merchant accounts for high-risk businesses, also known as High-Risk Merchant Account Services. Some
of the merchant categories that generally require High-Risk Merchant Accounts are dating sites, online casinos, credit repair services, etc.
On the other side, some companies working in high-risk industries don’t need to have high-risk merchant accounts if their business is not related to gambling or pornography websites.
What are the Advantages & Disadvantages of High Risk Merchant Accounts?
In the past, some banks and credit card processing companies were not willing to work with high risk merchants. It was a complicated process for a person working in a high-risk industry to get a merchant account. As a result, many companies had to go through expensive third-party processors that charged steep fees for their services.
In the present, High Risk Merchant Account Services offer a good solution for those high risk merchants that want to start a website and process online payments with a regular merchant account.
High Risk Merchant Accounts have their own advantages and disadvantages. The main advantage is that many merchants can now establish a regular merchant account and then specialize in certain areas of their business. In this way, they don’t need to go through the expensive process of establishing a new merchant account each time they want to process credit cards for a different area of their business.
In addition, High-Risk Merchant Accounts offer features such as recurring billing which is not an option available with some high risk processors and resellers. High Risk Merchant Accounts have a monthly fee but it is lower than the one for third party high risk processors.
High Risk Merchants should carefully analyze all the terms and conditions before sealing any agreement with a High Risk Merchant Account Services company. Some of them offer accounts that come with their own shopping carts and credit card processing software, while others will require certain modifications to be done to the merchant’s website.
What is the Procedure of Acquiring a High Risk Merchant Account?
The application process for a high risk merchant account can take up to 4 weeks, which means that it is not overnight. It usually takes around 2 weeks for the initial application and another 2 weeks for processing. The company will need:
- The name of the owner
- The business address
- Personal information about the owner and a full list of employees who will be working with the account.
- Credit card processing experience, if existing
- A valid taxpayer ID number
- An approximate amount of money that will be processed monthly through the account.
In some cases, there are restrictions on what companies can get approved for a high risk merchant account. For example, High Risk Merchant Services do not approve accounts that process keno or horse racing transactions.
High Risk Merchant Accounts are suitable for online businesses which generally require easy to get and inexpensive service providers. These services offer lower rates than third party providers.
Nevertheless, High Risk Merchant Accounts do not support all available services like recurring billing or shopping carts. It is also necessary to be aware that some accounts are more suitable for short term businesses while others can work better for long term projects.