HIGH-RISK MERCHANT ACCOUNT BENEFITS
Right after initiating business and making necessary arrangement and completing adequate paperwork, a refusal from the merchant bank for that of a merchant account may be very disheartening. This kind of business will then fall under the high-risk category and you will not be able to accept online payments via cards.
In this regard, you may also be optimistic about being a high-risk merchant. To be eligible to obtain credit card payments, a business holder has to have a merchant account in the receiving bank. To acquire this account, the business owner has to provide a financial history as well as the product types and services. The bank determines whether the merchant account will be issued. In case of a high-risk merchant, the traditional bank denies it. The high inclination to chargeback is the primary factor behind a high-risk merchant. The reasons for this are,
- Product or service type.
- Average sales amount in dollars.
- Sales internationally.
- Variation in sales monthly.
- Processes of customer service.
Despite being in the high-risk category, the merchants can profit. The benefits are as follows:
· Acquiring capability of global expansion – Being at high risk, these merchants are not obligated to follow limiting rules of traditional accounts. These accounts limit the transactions to the parent country only. They may not allow the merchants to carry out the card-not-present transaction process and also may restrict the methods of payments or may also confine the International payments. On the contrary, the high-risk merchants can transact according to their will, irrespective of the currencies. This way they can globalize their business.
- The absence of volume caps - This is very common in traditional merchant accounts. As businesses are unpredictable, they cannot ensure a stable income every month. On the contrary, the banks relate the account with stable finances, which do not happen with everybody. The high-risk merchants can transact freely as they do not have to worry about the target volume per month. The subscription and recurring merchants are highly benefitted from these high-risk accounts.
- Chargeback is minimized - If the chargeback ratio of 1% is breached, a low-risk merchant’s account may get terminated. As there is a high chargeback for the high-risk merchant account, they are safe. These merchant accounts are generally not terminated due to high chargeback.
Hence for a high-risk merchant, it is largely beneficial to work with a payment processor of high risk as that may yield success for a longer period.