Credit Card Processing For High Risk Merchants

The economy may have brought to the forefront the dangers of using credit cards irresponsibly, however consumers are not likely to give up the convenience and ease of use associated with credit cards anytime soon.  For this reason, credit card processing services will continue to be something that merchants look to in order to accept credit cards for products and services.

Some merchants are considered high risk as a result of the type of industry in which they operate.  For those businesses, credit card processing may pose a higher risk than your “normal” vendor, therefore special steps must be taken to ensure credit cards can be accepted safely

What makes a business “high risk”?

Businesses that have a very large volume of sales and transactions may be considered high risk.  If that business also operates in an industry that is particularly vulnerable to fraud, they are also considered high risk.  Here are a few examples of businesses that would be considered high risk and therefore require a special merchant account and credit card processing.

  • Travel services
  • Gaming and gambling services-online services especially high risk
  • Adult services or products
  • Telemarketing services
  • Collection agencies
  • Shopping clubs
  • Lotteries
  • Escort services
  • Check cashing services
  • Home based business
  • Online services; tobacco and cigarette vending, auctions, debt, dating and detective are just a few of the online services that are consider high risk.

The type of businesses you see here are just the tip of the iceberg of businesses that find it difficult to open a standard merchant account.

Why do high risk merchants have trouble getting a merchant account?

Any business that is considered high risk by domestic banks or traditional merchant account providers will have more difficulty opening a merchant account than a business that is not considered high risk.  Any usage of online services increases the risk of fraud due to the unpredictable nature of the web environment.  While there are dozens of ways for a business to safeguard against fraud, many conventional merchant account providers simply are not willing to get involved with a high risk business.

Where do high risk merchants turn?

Regardless of the nature of their business, those who are considered high risk still want the benefits resulting from credit cards as a method of payment.  Credit card processing is not impossible for high risk merchants, however finding a merchant account provider and credit card processor requires a bit more diligence.  There are companies out there, many of which are found offshore that specialize in high risk merchant accounts.  Understanding the unique situation high risk merchants face, these companies offer credit card processing services to companies that would otherwise find it impossible to do business with customers who pay by credit card.  It is important to carefully review high risk merchant account providers for the same reasons you would a regular merchant account provider.  Who you choose to do business with and entrust with your credit card processing can make the difference between increased profit or increased problems when dealing with credit card transactions.

Photo via bloo_96

Posted on Friday, August 27th, 2010