Since you are here, you must be well aware of a merchant account. It is a line of credit by which a merchant can accept credit and debit cards as their main mode of payment. Now, there are some businesses deemed as high risk which need special merchant accounts known as the High Risk accounts. Let’s see how it works and what it is.

Why the term ‘High Risk’?

There are some businesses such as adult products such as eBooks or sex products, online gambling and trading agencies which are popularly known as high risk businesses. This term has been annotated to them because of the simple reason that most of the products or service transactions offered from their website are very likely to call for a refund or legal claims from the customer. If that was to be handled with a simple merchant account then it would have been tough to handle so many chargeback and refund request as also legal claims. That’s why came the concept of High Risk accounts which have a different fee structure, generally more than original merchant accounts and which provide many features due to which you are less prone to these attacks in these High Risk industries.

Situations for a High Risk:

Various situations may lead to a merchant account being classified as a High Risk account. The main situation that arises is the case where a stolen credit card is used often for the same business and hence calls for a greater number of chargebacks. Any business which has a very high number of refund requests will be deemed as High Risk business. In E-Commerce this fraud can be elevated to a higher extent because these are generally card-not-present transactions where just the card details are used. Hence the chances of such fraudulent transactions increases manifold. Also a business where customers are not satisfied with the products very often will be considered as high risk. A debit card transaction with insufficient funds is also considered to be in the periphery of a High Risk Merchant account.

Features of a High Risk Account:

There are some additional features in a High Risk account so as to protect the merchants as well as the credit card issuing banks and the acquiring banks. The fee structure for these accounts is much more than normal merchant account. To protect the integrity of funds, there are additional safeguards to route the funds correctly to the desired merchant. One such tool used by the merchant account credit card processing companies is delayed merchant settlement. In this case the funds are put in hold for a slightly longer period than the normal ones. Also there is a reserve account in which around 10-15% of the total merchant settlement amount is kept in hold for 1-6 months to cope with any unforeseen chargebacks. Once the reserve period expires, the funds are transferred back to the merchant’s bank account either by deducting the interest for the specified period or without doing so.

If you consider that your business is highly risk-oriented, it is hard and not probable to get a usual e-com merchant account. At this point, the high risk merchant account matches the course perfectly right. This is easily accomplishable with the international provider’s ccNetPay. With many businessmen dealing with, some might prefer taking risks, whereas the others will not sign so. Such risk taking businessman will stumble on to acquire some preventive system to keep their risky business safe and working. Depending upon the business category and risk involved, the preventive system will be guarded to govern it out!