High Risk Merchant Account

Occasionally there are businesses that are unable to set up credit card processing services with a local or domestic merchant services company.  Though the business may appear to be a great merchant with strong sales, there could be a number of reasons that would force the company to sought the services of a high risk merchant account provider.

Many times companies facing acceptance problems from domestic payment processors decide to find a high risk credit card processing company that can accept their circumstances and provide them a solution for their business.  Generally these business are facing one or more of the following issues that require high risk payment processor;

  • Type of Business
  • Location of Business
  • High Chargebacks
  • High Ticket / High Volume
  • TMF Business

One of the most common reasons a merchant pursues a high risk merchant account is due to the type of business that they are operating.  Whether its due to risk, licensing, or other factors; no matter how hard these merchant try they will be unable to find a domestic payment processor that will accept their business - leaving them the only option to find a high risk payment processing service provider.

There are a handful of businesses that are not accepted by general domestic processors but do not require the use of a high risk merchant account.  Industries such as tobacco and tobacco products are increasingly difficult on the domestic level, but can be placed by using a payment processor that specializes in tobacco merchant account services.

Other reasons that merchants might need a high risk merchant account could be due to the location of either the merchant or the country that the business has been registered in.  Most general merchant service companies are unable to set up businesses for payment processing services if either the corporation or the business signer is not a resident of their local jurisdiction.

In some instances, the business may do a significant amount of monthly sales volume, but the business model or for an extenuation reason the business has suffered a high percentage of chargebacks.  With this scenario, many local payment processing companies are unable to accept these kind of merchants; thus requiring the merchant to look to a high risk credit card processing service.

Other types of business models may have trouble being accepted in with a domestic payment processor based on the types of payments that they need to accept.  Having a business with excessively high transaction amounts or merchants that need to process a very high volume of transactions per month might require the use of an offshore merchant account along with a high risk payment gateway that is able to integrate into the high risk payment processor.

Another problem that might affect merchants could be a history of being placed on the TMF (Terminated Merchant File) list.  Merchants placed in this file might have a history from a previous business; whether it was from problems at a previous business or if funds are owed to a previous payment processor, merchants on this list will not be able to process transactions with a local processor.

There are a variety of factors that could force a business to seek out a high risk merchant account, but they are still a possibility for payment processing.