Merchant accounts are required in order for a business to accept credit card payments. As a merchant, there are two places you can obtain a merchant account; a bank, or a third party provider. For online merchants the most popular, so in most cases cost effective, source is from an additional party merchant account doctor.
A high risk processing account is required by businesses that, when compared into a 'traditional' goods/services business, are at a higher risk of:
High quantity of sales
High rate of refunds
High rate of charge-backs
Other reasons a merchant may be categorized as a high risk are:
Merchants Location - Some merchant account providers will not accept merchants from certain countries.
The Product/Service the merchant sells is prohibited in some jurisdictions.
Merchant Credit standing - Some providers will not accept merchants with poor or no credit foundation.
Due to the high risk classification, most banks will not provide an account provider to people in a riskly industry (such as adult entertainment, replica goods, pharmacy merchant account payment gateway etc). Because of this some third party providers offer their services to both general merchants and high-risk merchants.
Merchant account providers that have been developed to service riskly merchants will most likely provide a higher level of fraud protection, so that you can decrease might their merchants incur. However, in order to cover the higher level of risk, rates high risk merchant account will be higher than their lower risk counter-parts.
When purchasing a high risk merchant account, there are several factors to be able to take into account. Rates will be one of the most important factors, as well as includes fees for refunds and charge-backs, along with transaction fees, the discount rate and ongoing fees. Require need to take into account fraud protection, customer service and reporting available you r as a merchant.