The MSP interacts with the card companies (VISA/MC/etc.) and banks on behalf of the business.To provide the merchant with the hardware, software, and infrastructure needed to accept credit card payments and receive funds for those purchases.When a merchant service provider (also commonly referred to as a merchant account provider, credit card processor, or simply merchant processor) partners with a business, it serves a few primary purposes: One where the MSP knows your business intimately, and you have a strong relationship with the MSP as well. Pro tip: You want this to be a strong partnership. When we talk about getting a high risk merchant account, all that really means is finding a company who will give your business the tools it needs to accept credit card payments from your customer, whether in-person or online. So then… What’s a High Risk Merchant Account? What is a High Risk Merchant Account?Ī high-risk merchant account is a payment processing account designed to accommodate businesses that, statistically, are financially less predictable, overly prone to disputes/chargebacks and pose an elevated degree of potential loss to the merchant service provider and bank that supplies them with the technology & infrastructure to accept payments. It doesn’t make them bad or wrong – just more risky for a merchant account provider to let them wield the power of credit. These are some of the reasons why a business might be called “high risk” and, as a matter of fact, they simply have more chargebacks and more fraud. “I purchased a website from this guy, but I don’t like it at all.” Statistically, some business models are more likely to have chargebacks, like: businesses whose services are subjective in quality. Statistically, some business are more likely to have chargebacks, like: businesses who auto-enroll customers into monthly payments after their first purchase Statistically, some businesses are more prone to fraud, like: businesses who accept payments online when there is no physical person there to verify as the proper card owner, or Statistically, some industries are more “risky” than others, like: firearms, bail bonds, marijuanna, etc. That’s where “risk” comes into play on the MSP side. The business owner (aka merchant, aka YOU) gets stuck with the bill.īut if that business is no longer solvent, or disappears, then the merchant services provider (MSP) has to pony up the cash to cover the loss. What happens when a consumer isn’t happy with a purchase she made and decides to file a chargeback? So where does risk come into the picture? So, these card companies give their customers the ability to dispute fraudulent transactions, make chargebacks on purchases they don’t want anymore, and provide their card holders with whatever peace of mind they need to wield this little piece of plastic.Ī little piece of plastic that allows people, in many cases, to spend way more money than they actually have. We all know that credit card companies (VISA, MC, etc.) want to protect their customers (ie: the people with the credit cards) because they make them the big bucks. There are many reasons why businesses are classified as high risk, and most of them aren’t as “bad” as the term high-risk makes them sound. Let’s begin with understanding “high risk”.Īlthough the term may sound abrasive at first, don’t let the phrase “high risk” bother you. High Risk Merchant Accounts Buyers Guide What is High Risk?
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