It is evident that for a business to function in today’s world, any business would require to accept online payments. To facilitate the online payments, acceptance of credit cards, debit cards and much more, the business will require a merchant account.
However, it must be known that there are certain businesses that are termed as high-risk businesses or industries. For a business to be termed as high risk, the business needs to:
- Operate in a high-risk industry, or
- Function with a high risk of financial.
The point that makes a difference with high-risk industries is that when they set up a merchant account, they have to pay extra charges, which would not be applicable on those businesses that are not termed as high risk.
Who needs a high-risk merchant account?
High-risk merchant accounts are required by those businesses that are at risk of:
- The high rate of refunds
- The high volume of sales
- The high rate of charge-backs
- Fraudulent Transactions
When can businesses be considered as high-risk for merchant accounts?
A business or a company can be termed as high-risk in certain countries, while it may not be in other countries. Here are the reasons why certain businesses are termed as high-risk:
- Product specifications: Sometimes products sold by a company or a brand may be illegal in various jurisdictions. This may lead to your business being termed as high-risk industry.
- Merchant locations: Sometimes, many merchant account providers do not accept applications from various locations.
- Merchant credit History: Some merchant account providers do not accept applications from businesses and business entities that have no or poor credit history.
Apart from this, if a business is considered as high-risk or termed as the same, the business may deal in:
- Replica goods,
- Pharmaceutical supplies,
- Adult content, etc.
Another important factor to keep in mind is that the risk for such companies is also evaluated by the security of the website. If a website is a potential attraction for hackers, it will still be termed as high-risk industry or business.
What do you mean by high-risk MCC codes?
MCC codes are quite essential for businesses. The high risk MCC codes are four-digit codes that are used to categorize businesses according to the products and services that they sell. Certain associations have registered these codes in order to monitor the high-risk entities better.
How to set up a high-risk merchant account?
It is no surprising that high-risk merchant accounts are harder to set up. Most of the banks, as well as financial institutions, are unwilling to offer these entities a merchant account because of their in-house policies and the lack of tools to support them.
However, there are various banks and financial institutions that offer a swift and smooth merchant account to high-risk industries as well. Such accounts can be found online or offline. However, you will need to research for a while and ascertain which of the many options will be apt for you.
Published by Rosie Joy