When a payment processor determines that your company account is more likely to have chargebacks, fraud, or a significant number of returns, they classify the account as high-risk. This could happen for a variety of reasons, including the fact that you are a new business who has never handled payments before or the fact that your sector is regarded as high risk with a high possibility of fraud. In order to cover this risk, processing costs are greater for high-risk merchant accounts.

Factors That Make a Merchant High-Risk

A payment processing provider may classify you as high-risk for a variety of reasons, some of which may appear obvious whereas others are more subtle. Every provider has a unique set of requirements for high-risk merchant accounts, however generally speaking, the following are what you may anticipate may be classified as high-risk:

If a business processes a lot of transactions or has a relatively high transaction rate, it may be deemed high-risk.

A business may be deemed high-risk if it sells to customers abroad in nations with a high fraud risk rating.

Just as they lack a track history, merchants who have never accepted payments before or who have only processed a small number of transactions in the past could be viewed as high-risk.

Even if a merchant has a perfect track record, they could still be classified as high-risk since the sector they operate in is thought to be more susceptible to fraud, refunds, and chargebacks.

A High-Risk Merchant Account: How Do I Get One?
You must submit business and tax records when you register for a merchant account. Your payment provider will determine if you are a high-risk or low-risk merchant after processing your application and adjust their strategy accordingly.

It's a fine decision to compare service providers and select the one that most closely matches your company's requirements because certain payment processors are better suited for high-risk clientele. You should carefully study the contract before selecting a payment processor because every bank as well as payment processing platform is unique and has various rules for the merchants they designate high risk.

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