Whether you have an online business or a shop made of mortar, you will need to accept the money in the form that it is prevalently available in, i.e. plastic form. These are debit and credit cards that you must take the payments from when a customer purchases something from you. However, you cannot accept a payment directly and have the money deposited into your account. You need to have a merchant account with a bank and then you are authorized to receive the payments and have them deposited into your account. Third parties such as PayPal are companies that act as middle parties so you don’t have to have a direct merchant account.
However, there are businesses that banks and books consider high risk businesses. These businesses are considered high risk because a lot of transactions are taking place here through debit and credit cards. It won’t be wrong to say that most part of the transactions being done in these businesses is through debit and credit cards. MLM, charities, B2B, auction houses, electronics etc are considered high risk businesses and having a merchant account for such businesses isn’t as easy as it might sound in writing.
The merchant accounts for such businesses are considered high risk merchant accounts. Due to high risks involved these businesses have to do some additional efforts to get merchant accounts. However, the relief for such businesses is in the form of vendors that are providing high risk merchant accounts as specialty. These companies are specifically working for these high risk businesses and it is high risk merchant account they exclusively deal in. These companies have their own ways of dealing. Read a few websites that are solely working on high risk merchant account and you will know what is most common among them all.
The first thing you will notice on these websites is that the rates for these accounts are higher. Of course, this is obvious that a business with higher risks will have to pay for the high risk factor. A standard merchant account isn’t as expensive as a high risk merchant account. Furthermore, you might even be asked to submit a big upfront cost as well. This is also called the setup fee. You will be giving more to the merchant account provider in the long run as well since the charges taken from every transaction, especially those done through credit cards, will also be higher.
Some companies will be ready to offer you a merchant account even if your credit score isn’t perfect or good at all. They will do this for even higher charges, big setup cost etc. As per Michael, an Analyst from Amslv, the most important thing while looking for such companies is to get the customer reviews and expert advice. You might be disappointed to hear it but the truth is that there are a lot of companies that are not sincere with their customers. These companies will lure you into opening a high risk merchant account with them but you will get to know the bitter realities later on. Always read the contract carefully!