Getting a high risk processing merchant account isn’t easy, but it’s necessary for some businesses. If you’re in an industry that banks and payment processors see as risky, you might find yourself needing one. This guide will walk you through what these accounts are, the hurdles you’ll face, and how to manage them.
Key Takeaways
- High risk processing merchant accounts are essential for businesses in risky industries like gambling or adult entertainment.
- These accounts come with challenges like higher fees and stricter compliance requirements.
- Choosing the right payment processor can make a big difference in managing a high risk account.
- Implementing fraud prevention measures is crucial for minimizing chargebacks and maintaining account health.
- Staying informed about industry changes helps in adapting to new regulations and trends.
Understanding High Risk Processing Merchant Accounts
Definition and Characteristics
High risk merchant accounts are specialized bank accounts that allow businesses deemed risky to accept payments via credit cards or other electronic methods. These accounts are essential for companies that face a higher likelihood of chargebacks, fraud, or regulatory issues. The "high risk" label can be due to various factors such as the industry type, business model, or even the geographical location of the business. Each payment processor has its own criteria, but common threads include industries with high chargeback ratios or those prone to fraud.
Industries Typically Classified as High Risk
Certain industries are more likely to be tagged as high risk. These often include:
- Travel and Hospitality: Frequent cancellations and refunds make these businesses prone to chargebacks.
- Gambling and Adult Entertainment: Legal and