Everything That You Need To Know About High Risk Merchant Accounts
The high risk merchant account is a kind of account that must be approved by a financial institution or by a bank. This account will allow businesses to get the payments of their customers through their debit or credit card. The merchant will need to pay more for the merchant services, this will add to the costs of the business. There are actually businesses who works with merchants by providing them a faster payout, a reserve rate, a competitive rate and a fast payout. This can help businesses who cannot find an area for their business.
When the method of a business is difficult the it is considered as a high risk business. Here are examples of high risk businesses; car rentals, bail bonds, legal offline, collection agencies, travel agencies, online gambling and other businesses that operates online and offline. Banks and financial institutions requires these type of businesses to apply for a high risk merchant account since they have a hard time in working and processing payments with these type of businesses. A merchant account and a high risk merchant account has different fees.
The merchant account is a bank account but it is just like a line of credit, since this will allow the businesses to get payments from the debit and credit card of their customers. Acquiring bank is the bank that provided the merchant account and the issuing bank is the bank the issued the credit card. Gateway is another important factor in the process, since it will transfer the transaction of the customer to the merchant.
The acquiring bank will let the merchant sign up for a high risk merchant account if necessary. In the case of a high risk merchant account, there are additional worries about the integrity of the funds, and the possibility that the bank may be financially responsible in the case of any problems. This is one of the reasons why there are more policies in high risk merchant accounts. The bank holds the funds for a longer time to avoid any fraudulent transactions.
Payments to a high risk merchant account are deemed to carry an increased risk of fraud, and an increased risk of charge back, refund, or reversal. Online businesses is another risk since they cannot really see the credit card when they take orders, this could increase fraud.
Before a merchant could apply for a merchant account there are certain things that must be taken into consideration. It is best if the merchant will ask for a much lower rate before the merchant should choose a provider for a high risk merchant account.