In the business world, where credit cards are accepted there is some behind-the-scenes processing at work, thanks to merchant account providers and processors. A merchant account refers to the special banking account set up for the specific purpose of handling funds from credit card and debit card transactions. While a merchant simply puts cash and personal checks into a cash register, getting funds from a credit card involves having those funds transferred through a merchant account to the merchant’s business bank account. While there are many merchant account handlers and credit card processors all over the world, certain businesses will find that getting approved for a merchant account is not such a straightforward process.
Merchant account providers make their money through the fees they charge merchants. Usually these fees are on a per-transaction basis, and are a percentage of each transaction. But some merchants pose more risk than others. The risk is financial – more frequent issues with credit card fraud, charge backs, and other disputes. For these merchants, getting approved for a standard merchant account may not be a possibility. Instead, they’ll need to apply for a high risk merchant account. High risk merchants understand that you are a business that needs to accept credit cards, and that you are also a business with a degree of financial risk. They will still be willing to work with you, but they may charge higher per-transaction percentage rates, and may also possibly charge monthly or yearly fees to help cover any costs they incur as a result of your business.
You may be wondering if you are considered to be high risk by a merchant account provider. If you have been turned down repeatedly for no other reason (your credit is good, all of your financial documents are in order, etc.), then you can safely assume the problem isn’t with you, but with the type of business you run. Common high-risk businesses include gaming venues and adult-oriented businesses. If you run one of these businesses, or you are simply having trouble getting approved for a regular merchant account, then consider seeking out a high risk merchant provider.
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