What is a High Risk Merchant Account?
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What is a High Risk Merchant Account?
Certain types of businesses have a higher risk than others based on the past performance of that category of business. Any financial transaction has a certain level of risk. The institution granting the funds, or account, determines their fees based on the level of risk. The lower the risk, the lower the fees and vice versa. Some types of businesses have a very difficult time being approved for a merchant account and others won't be approved at all.
The process for a high risk merchant account is more intensive and time consuming than a low risk account. The product is often reviewed as well as delivery times. A criminal background check is not unusual. If the company is transferring from a merchant account that account will be reviewed for charge backs. Sometimes not only does a high risk merchant account charge higher fees but a reserve will be required as well. The reserve is based on the volume of the account. Online businesses have a higher risk than bricks and mortar businesses and so will be charged higher fees. I
f your ecommerce business has been classified as high risk, don't give up. There are firms that assist high risk companies in obtaining merchant accounts.
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