A merchant account gets identified as a high-risk account when the payment processor labels it as a higher risk for chargebacks and fraudulency. Moreover, the high-risk merchant accounts also get subjected to the rolling reserve. Read the PDF to know more!

1. What Is The High-Risk Merchant Account?
A merchant account gets identified as a high-risk account when the payment processor
labels it as a higher risk for chargebacks and fraudulency. Moreover, the high-risk
merchant accounts also get subjected to the rolling reserve.
A payment processor also holds a certain percentage of their income until it further
verifies that transactions were not fraudulent or did not carry the risk of chargeback. This
is why merchant accounts pay higher processing fees to account for the risks.
What are the reasons for a merchant to be considered high-risk?
There are several reasons where the payment processor identifies a merchant account as
high-risk. Each provider has a different set of criteria for high-risk merchant accounts,
and here are some reasons that mark them in the high-risk category.
High Transaction Volume
Several merchant accounts are considered high-risk if they have a high volume of
transactions and average transaction rate. If the merchant accepts international payments,
their business gets marked as a high-risk business.

2. New Merchant
If a merchant has never processed payments or carries the minimum history of
processing transactions, their business gets considered high-risk as they don't have a
track record.
High-Risk Industry
If a merchant carries a clean record, they get marked as a high-risk industry due to the
high risk of fraud, returns, and chargebacks. This is why subscription-based companies
get labeled high risk, as many people sign up for the trial and forget to cancel their
payments.
Give A Read To Know How Can One Open The Merchant Account
In case you run an eCommerce business, then given below are some factors that you
need to keep in mind while choosing the right payment provider for your merchant
account. It stands true, especially when a consumer has a high-risk merchant account.
Rate And Fees
The merchant account fees vary and depend upon the volume of card transactions that
need to be processed. The payment processor includes fees that need to be paid for debit
and credit card transactions, prices, services charges, and much more.
Chargeback Fees
If an individual has a high-risk merchant account, the chargeback fee is the factor that is
considered seriously. This is because businesses qualify as the high-risk because of more
customer chargeback.
When the fees remain high for chargebacks, the merchant will pay a heavy amount to
banks and other financial institutions that are involved between them. As a result, some
providers can go to the extent of closing their accounts if the chargebacks remain high
and frequent.
When individuals apply for a merchant account, they need to provide business and tax-
related documents. After processing the application, the payment processor access
whether the business gets classified as a high-risk or low-risk merchant account.
Conclusion
In the end, we can conclude that it would be better if you choose the payment processor
that carries some advantages. It will help you to make secure and safe financial
transactions. It will also help in detecting fraudulent activity.
Originally Published: https://bit.ly/3tldiLW