Generally, a high-risk merchant account is a business or an industry that is famous for chargebacks and fraud, borders on the legitimateness or is viewed as risky by affiliation. But there is no need to worry. We will dive into the details of what all that implies in no time, so continue reading. Businesses with higher than normal chargeback rates (such as travel agencies), businesses with age-restricted items (like tobacco sales) and other businesses that are perfectly legitimate and legal. Individual businesses can also be considered higher risk even if they aren’t in overall high-risk industry.Not all high-risk businesses are considered high risk because of their industry. In addition to particular industries, individual businesses may be considered high risk for factors including poor personal credit; inclusion on the Terminated Merchant File (TMF or MATCH list) for processing misconduct, non-payment, or fraud; high dollar value transactions with no business history; high dollar custom products; large number of international transactions.
Businesses are also treated differently depending on the level of financial risk they present to their processor. All processors will cautiously judge your business to decide if you fall into the “high-risk” category.If for reasons unknown, your business is categorized under high-risk one, the results can be serious. Most of the processors will basically decline to approve you for a merchant account, while others will charge you undoubtedly higher rates and fees than you would some way or another need to pay.Much like applying for a loan, when a business owner applies for a merchant account, there is an underwriting process the account provider (or loan provider) will go through to estimate the risk of adding your account to their portfolio.