8. What is a high risk merchant what makes them risky?

There are industries that are considered high risk and the application could be declined if it is too risky for the credit card processor. Listed below you will find the various types of high risk possibilities that could lead to an application being declined.

Large monthly sales volume - If you process over $500 per ticket or your monthly sales volume is larger then $25,000 per month then you will fall into the category of high risk merchant. This usually means the merchant account service provider will be extremely thorough in making sure your business is legitimate which may include documentation of tax returns and financial documents. This is to prevent any large losses from fraud or from the business itself.

Derogatory credit - It wasn't too long ago when having a poor credit history or even no credit history made it virtually impossible to have a merchant account. Today, merchant account providers have very little problems setting up a merchant account. If you do have a poor credit history or no credit histroy at all you may pay a slightly higher discount rate as well you may have a reserve account set up by the processor.

Business Type – There are certain industries and businesses that merchant account providers may restrict based on the history of previous businesses. This may also include the adult industry where chargebacks occur quite frequently. Some processors may only process businesses located in the United States or their respective country of location.

Other types of high risk businesses include credit repair and muli level organizations such as multi level marketing (MLM). There are some merchant account providers who specialize in the high risk industry but be warned the fees are higher then having a normal merchant account provider. There may also be a 2 to 3 day delay in the depositing of funds.

General Information

1. What exactly is a Merchant Account and do I really need to have one?

2. What other options are available ?

3. Is it necessary to accept credit cards ?

4. When I make a credit card sale how do I get the money ?

5. Can I apply for a merchant account at a bank ?