High Risk Merchants
High Risk Merchant Accounts
While it is never a problem for land-based or online businesses with lower risk contents to procure own account rather easily, the high risk merchants are always denied the privilege of owning a high risk merchant account by majority of the domestic merchant account providers.
In order to receive credit card payments, the merchants are required to maintain a merchant account that can facilitate easy processing of credit cards and other such instruments. These merchant accounts are allotted by designated domestic banks, credit card processors and other merchant account providers.
High Risk Merchant Categories
There are a number of online businesses run by apparently high risk merchants that are extremely risk-prone due to various reasons including high sales volumes and the resultant susceptibility to fraud. Such high risk merchants, even though making enormous profits, encounter considerable problems in accepting online payments due to non-availability of high risk merchant accounts. Any businesses with one or more of the following characteristics can be categorized as a high risk merchant business:
* The business is not registered as required by law.
* The vendor or his business is blacklisted by merchant account providers/credit card processing companies for reasons of bankruptcy, fraudulent dealings or etc.
* The merchant’s credit history is not consistent.
* The merchant runs any business such as telemarketing, travel, online pharmacy, gaming, ticketing, entertainment, downloadable software, etc.
* The business generates large volumes of sales resulting in large number of transactions. Such a situation is likely to lead to instances of fraud and term the vendor as a high risk merchant.
* The business is small with very insignificant volumes of sales and fewer numbers of transactions. Such a business may not be able to afford the heavy expenses involved with purchase of fraud screening software/tools and other miscellaneous features as well as making payments required towards third party processor fees.
Who Are the High Risk Merchants?
Vendors engaged in the following businesses online are classified as high risk merchants:
* Adult entertainment.
* Travel.
* Pharmacy.
* Online casinos/gaming merchants.
* Telemarketing merchants.
* Tobacco and cigarettes.
* Replica products.
* Online auctions and debt services.
* E-wallet and E-cash.
* ISP and hosting services.
* Online dating services.
The above businesses do not make all the vendors exclusively high risk merchants. The degree of ‘high risk’ is bound to vary from one high risk merchant to the other depending on a host of factors.
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