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3 Benefits of High-Risk Merchant Accounts

Posted on 2 June, 2016

Certain businesses sell products that come with a higher risk of fraud through chargebacks and stolen cards. Not every buyer is out to defraud the seller, but just try relaying that thought to major merchant account providers!

A high-risk business may also face an issue of acceptance. The major merchant account providers don’t want to deal with morally ambiguous products for fear of societal pressure. A high-risk merchant account, however, can get around the major providers by offering the same credit card processing services at competitive rates. So what’s the problem? Discover three benefits of securing a high-risk merchant account.

Less Hassle When Chargebacks Happen

benefits of high-risk merchant accounts

Image via Flickr by frankieleon

A low-risk merchant account comes with its risk: Too many chargebacks can lead to account termination, a concern for any business. Since the account is opened as a high risk, the provider is aware of the dangers beforehand. When a chargeback happens, or a fraudulent card gets used, the business won’t get threatened with loss of the account. Instead, the provider has the company take its preventive measures to protect against fraud.

A high-risk merchant account provider typically requires the business to keep a reserve fund to cover chargebacks. How much is set aside is a percentage of the average monthly sales; that percentage can range from 5 to 10 percent. What the provider ultimately requires as a set-aside amount depends on various factors outlined when someone opens the account. Money also needs to be left in the account for a specific amount of time.

While these protective measures may come as a hassle for the business, they’re a necessity for this type of merchant account.

Heightened Security Measures

While eliminating all fraudulent cards isn’t completely possible, it is possible to catch them through indicators and other detection techniques.

High-risk merchant accounts use reliable detection techniques during the transaction process to figure out whether the card is legitimate. These techniques can protect the business, the merchant provider, and the card’s original owner from theft. The fewer fraudulent transactions that take place, the better off you’ll be. The only sign the customer notices is that card processing takes slightly longer than a standard transaction.

Access to Larger Markets

Opening up a high-risk merchant account enables you to create a website for sales online and over the phone. Your website acts as a virtual catalog for offering products to anyone who has an internet connection. Without a website, a business restricts itself to a local market, stifling growth and profits. It doesn’t matter whether the product sold is a service or a physical item — accepting credit cards brings in more buyers who prefer the safety and convenience of their cards.

While you’ll face a certain level of risk and fraud when you accept credit cards, you can eliminate some of that risk when you use a proper merchant services provider. Everyone from the business to the customer benefits in the long run when you make some smart up-front decisions.

 

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Bad credit merchant account credit card processing services

Accept all major credit cards

Regardless of Credit History!