High risk merchant account holders are those who have a variety of unusual credit and financial profiles. These accounts are the result of a variety of factors, ranging from the financial circumstances of a merchant to the specific requirements of an individual or business. Because of the high level of risk associated with these accounts, it is important for merchants to carefully consider what services they require to meet their particular needs.
It is often very beneficial for a merchant to open a “normal” account. These accounts can usually be managed fairly easily by the processor and provide a good amount of stability in a business environment. It is important to note, however, that the volume of transactions often requires a large amount of overhead and that a large number of credit cards can have a negative effect on the overall profitability of a business. If the business is large and operates through a major credit card brand, it may be more advantageous to open a “normal” account and then move to a high risk account if a more suitable option presents itself. This is especially true when the merchant does not have many credit cards available to accept and is forced to rely on a limited amount of “cash only” transactions.
One of the most commonly abused features of high risk merchant accounts is the ability to obtain multiple lines of credit. Many accounts will grant the holder access to up to 100% credit on purchases, which can result in the issuing of an excessive amount of credit to an individual or business. While this feature can be useful when it is properly used, a merchant should also closely review the terms and conditions of the account to ensure the maximum amount of credit is granted. Learn more information about high risk merchant account.
High risk merchant accounts can often be very expensive for an individual or small business. Depending upon the volume of transactions and the type of business, this price can vary greatly. A business that operates through a popular credit card brand is often able to obtain a very competitive rate. If the business does not make enough sales to cover the fees for the account, it may be necessary to close the account in order to avoid over extending the merchant. This is especially important if the merchant is a small local business that has no direct relationship with the credit card company.
The cost of opening a merchant account also varies greatly. Some providers offer introductory rates to attract new accounts, and these can sometimes be very expensive. It is important to carefully review the terms and conditions of a merchant account and compare the cost of different accounts before signing up.
Most high risk merchant account holders will be required to pay a fee for the services they receive. This is typically based upon a percentage of the total transactions made or a set amount, such as 10%.