Who Needs A High Risk Merchant Account?
Volume, trade determine who has to pay high rates.
The payment acceptance field has clamped down on credit card processing services for high risk entities, and there are some fields where traditional card authorization has been supplanted by Bitcoin, other cryptocurrencies, and bank transfers. Prepaid debit cards often are used to fund accounts which act as third party and escrow services for purchases. Even so, if you have legitimate goods but are in the high risk category, then you can still take ordinary credit cards for sales transactions. As always, processing fees can be as high as 12.5% of the sale, so you will need to adjust your profit margins accordingly. Additionally, you might end up paying holdback and deposit charges, and you probably won't be seeing the next day funding enjoyed by low-risk companies. Even so, if you want to take credit cards and have been branded with the Scarlet Letter that is High Risk, you still deserve to be treated with dignity and respect as you peddle your wares.
What kind of businesses are considered to be in the high risk category? In the SEO field, there is an expression of "PPC" which stands for adult entertainment by its four letter moniker, pills, and casinos. In banking, there is a much broader definition but it is still pretty close. What you may not know is that people in the antique sales business, auctioneers, limo services, tealtors, dating sites, some charities, camera sellers, psychics, and auto transport companies are considered to be risky! Start-up companies, diet clubs, supplement sellers, computer repair services, artists, and custom made product sellers. Here again, the risk of a chargeback is what puts you into payment purgatory. Should you want to sell pre-owned vehicles, water filters, furniture (!), health club memberships, concert tickets, or even rent out your second home to vacationers, then you could be paying through the nose for merchant services. If you want to know why insurance agents avoid taking credit cards, it is because they are on the list! At another end, MLMs, flea market kiosks, and travel agents can find themselves under special scrutiny. With some products, like Electronics, there is the danger that people will buy items with stolen cards and then resell them. With network marketing, people may get buyer's remorse (or pyramid suspicion) and charge back. Friendly Fraud, where a buyer claims not to have received a product, can also consign merchants to this unwanted category.
Notes and Special Information
Special note: Bad credit can turn you into a high risk entity as well. If your principals are on the Match List or TMF, then you may get worse rates than peddlers of morally dubious products.