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What is high risk merchant account processing?
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High risk merchant account processing refers to a specialized merchant account that is set up specifically for businesses of a high risk nature. Merchant account processing refers to a bank agreeing to process credit card payments in return for charging per-transaction fees (typically these fees are a percentage of each individual sale, and are no more than 1%-1%) and monthly service fees for a business. High risk refers to the financial risk that a business poses to the merchant account provider - the bank. Your typical store or restaurant does not usually pose any type of financial risk to a bank, beyond the normal risk of fraud and theft. High risk natured businesses include adult entertainment, travel agencies and casinos and other gambling establishments. These have risks of fraud and theft and chargebacks, but due to the nature of the businesses the risks are even higher. High risk merchant account processing is available for high risk businesses that meet certain criteria.
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How does high risk merchant account processing work?
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Once the high risk merchant account processing account is set up, the high risk business is ready to process credit card payments. This is done with the use of credit card processing equipment. When a customer is ready to pay for their transaction, they hand their credit card to the merchant. The merchant swipes the card through the credit card processing equipment, enters in the transaction amount, confirms the transaction, and then submits it for authorization. The high risk merchant account processing account transmits the transaction to the issuing bank, where the transaction is authorized. The funds are then transferred through the high risk merchant account processing services to the merchant's bank. The entire process takes less than a minute, and the funds are available in the merchant's account in a few days, or in some instances, just a few hours.
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How much does high risk merchant account processing cost?
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The costs of high risk merchant account processing can vary. Upfront costs include an application fee, and sometimes a setup fee. Depending on how risky the high risk business is, and the credit history of the business owner and operator that is applying for the high risk merchant account processing, there may be additional security deposits that will be required in order to approve the account. Once the account is ready for use, fees are limited to transaction charges, batch header fees, and monthly service charges.
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How do I sign up for high risk merchant account processing?
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You will need to get in touch with a merchant provider that offers high risk merchant account processing. You can find merchant providers at local banks, credit unions, and online.
