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Merchant Account High Risk - Merchant Account—High Risk Account Information

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A bank account or payment agreement is called a high risk merchant account if it is designed for a business that is considered high risk. High risk businesses normally have to acquire merchant services at a higher cost, which can increase their cost of operation. There are services that specifically deal with high risk merchants and offer competitive rates to attract companies that are finding it difficult to set up their business at a location.

There are several different industries which have businesses that are high risk due to the nature of the industry. Businesses, such as travel agencies, bail bonds, legal gambling, and all adult businesses are labeled as high risk. Doing business with such a company can be risky for banks and payment processors, therefore, they are obliged to get a merchant account (high risk) which is different from regular accounts.

Bank accounts enable companies to receive payments for credit cards and debit cards. Banks may provide the payment processing facility to customers, or the customer may need to sign up for a merchant account with another payment processor that routes the collected funds to the company’s bank merchant account. High risk accounts are associated with a question mark over the integrity of the funds, and the possibility that the bank may get involved in a difficult situation in case of a problem.

Money paid to a high risk account is deemed to carry an increased risk of fraud. For instance, a person may buy tickets using a stolen or fake credit card, or a debit card holder may use it to rent a car despite having insufficient funds in the card. This makes it more risky for banks and the payment processors, because they will have to handle the administrative fallout of dealing with the fraudulent activity. Ecommerce can also significantly increase the risk of fraud, because the merchants cannot see the actual card; they take orders over the internet. A company may also be classified as high risk merchant if it has a history of abuse related to credit and debit cards.

When merchants look to open an account with a bank or payment processor, they may be offered a high risk merchant account. High risk account rates, terms, and services can vary considerably, therefore, merchants can benefit from comparing different companies before selecting one to do business with. Services that cater to high risk companies normally offer a complete range of support, providing online and offline solutions for processing debit and credit cards.

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