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This article will make you aware in which cases do high risk merchant accounts act like revenue generators and boost sales, and how helpful they can be when there is no way out.
First of all let’s look up the meaning of the term “High Risk” and which businesses fall under it.
“High risk means that a certain e-Commerce business has a very high percentage of returns and chargebacks.” – GSPay.com
The most common e-Commerce business types falling under the High-Risk category: gambling and casino, VoIP telephony, pharmaceuticals and online drug stores, adult (though some high risk merchant account providers do not affiliate themselves with this business type), software, hardware and others. The full list varies from one high risk credit card processor to the other.
A high percentage of returns and chargebacks are very inconvenient for the merchant account providing company, the credit card processing bank, and, more importantly, for you. Chargebacks and returns are usually the main reason why a merchant account service terminates your account and contract. Moreover you will gain the status of a Terminated Merchant (TMF), and this will lead to many problems when re-applying for a credit card processing service at other companies and banks, local or offshore. Chargebacks are also the source of many chargeback related expenses.
Chargebacks and returns occur in two cases.
High risk merchant accounts and high risk credit card processors do not really protect your from many chargeback cases, prevention is achieved on another plane (see specialized articles on GSPay.com). Remember the fact that too many chargebacks and returns actually close your doors to credit card processing in no time and for long.
High risk merchant accounts do not terminate your account because high risk merchant accounts are made especially for a high percentage of returns and chargebacks. The rates are also much more moderate than those of general merchant account providers and processing banks.
Each specific high risk business has its own chargeback risk factor and, thus, its own chargeback rate. For example, online pharmacies, as a rule, have lower chargeback rates than online gambling websites. There are also special merchant accounts designed and elaborated specifically for some business type, depending on various factors, but these are not considered to be high risk accounts and could lead to a Terminated Merchant File along with many chargebacks.
High risk merchant accounts are generally more expensive than ordinary credit card processing accounts, due to the fact that the banks and the service providers are actually taking much more risk in processing your e-Commerce merchant business. But that’s the price you have to pay to earn on a high risk classified online business.
If you are sure that your e-Commerce business is classified as high risk but there are few chances of getting chargebacks and returns, because, for instance, special 3rd party verification systems are used, or you thoroughly check all, or almost all of your customers before sending out any orders or providing any services, you can manage to acquire an ordinary account, which is unlikely though. Third party merchant accounts will accept high risk businesses and offshore merchant services might also be good for high risk merchants. But after having a bird-eye view of the pros and cons or their services you will most probably find out that it’s much more convenient to use special high risk merchant accounts that any other accounts.
Now we will move on to summing up the direct and indirect financial benefits of high risk merchant accounts.
Financial benefits of High Risk Accounts:
As it can be clearly seen, high risk eCommerce merchant accounts are not inferior to regular and domestic accounts. High risk accounts have their special advantages, made especially for high risk businesses. If you’re running a high risk e-Commerce business a high risk merchant account will increase your revenues and boost your sales by providing the possibility of processing credit cards instantly and online. If your risk of getting a TMF mark in all major bank records is very high, then apply for a high risk e-Commerce merchant account today.
|Industry type||Rates||Industry type||Rates|
|E-commerce||from 2.8%||Nutra/Herbals||from 4%|
|Adult||from 4%||Regulated Forex||from 5.5%|
|File sharing systems||from 4%||Dating||from 4%|
|Crypto||from 4%||Licensed Gambling||from 4%|
|Downloads||from 7%||Replica||from 8%|
|Travel||from 4%||Pharmacy||from 8%|
|CBD||from 7%||Kratom||from 7%|
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