What kinds of businesses require a High Risk Merchant Account?

A standard e-commerce merchant account is easy to obtain and it doesn’t involve service terms designed entirely to save payment processor’s skin or exorbitant processing fees and other surcharges. A high risk merchant account, on the other hand, is not only difficult to obtain it can be very expensive too (especially if you’re not availing the right high risk merchant services).

Businesses that require an HRM account can be typically be classified into 2 different categories:

Administrative HRMs

As the name suggests, it’s the group of businesses that require high risk merchant services due to the manner in which they operate, sell products and services, whether online or through telemarketing and receive payments from their customers or clients. A few characteristics of Administrative HRMs (High Risk Merchants) are explained below –

1. Businesses that sell products/services in a manner that the probability of consumer fraud remains high at any point in time.
2. Businesses that have recorded above average chargeback rates and refunds in the past.
3. Businesses that can go bankrupt should a few market dynamics change.

Common examples of businesses that fall under the Administrative HRM category include –

1. A company that offers custom tour management service or sells travel packages online.
2. A business that carries out inbound/outbound telemarketing services (irrespective of the products sold).
3. Businesses that provide debt reduction or credit repair services.
4. Companies that sell supplements, weight loss products and other healthcare products on the internet.
5. A social networking website (irrespective of the niche) that sells products or contextual advertisements to its users. Dating sites, for example, receive membership fees from their users.

Regulatory HRMs

Unlike Administrative HRMs, some businesses are classified as high risk merchants because they either sell government regulated products or their operations in certain jurisdictions are affected by the applicable rules and regulations. Businesses that sell prescription strength drugs, cigarette/tobacco products, adult products or offer online casino/betting services are among the most common examples of regulatory HRMs.

The primary reason for classification of such businesses as high risk merchants is their vulnerability to fines & penalties in case a law is broken. In the United States, regulatory HRMs may find it extremely difficult to obtain a high risk merchant account because applicable laws and regulations make it very complicated for a payment processor to entertain and approve regulatory HRM account applications. So, these businesses usually try to avail HRM services from outside of the United States.

At AMSLV, we not only ensure flexible terms and competitive pricing but also help businesses get quick approvals. It certainly doesn’t happen overnight but we take special care to expedite assessment and also help you in strengthening your financial reporting and control mechanism if required to make things work.