High-risk merchant account

What it a high-risk merchant account?

These specialized merchant accounts are much in demand by companies such as online casinos, adult content sites, and even large stores like Wal-Mart. High-risk merchant accounts are essential for any organizations whose business daily entails a high volume of transactions, or transactions that carry a high risk of charge-back, cancellation, or non-authorization of payment. High-risk merchant account have been offered for several years now, and a series of features have been developed to minimize the risk of non-payment in such circumstances.

If your business is at risk from credit-card fraud and non-payment, and you are considering using a high-risk merchant account, the list below outlines the features that have become industry standard for this type of internet merchant account:

1. Real-time processing of payments

This simple precautionary measure is the defining feature of high-risk merchant accounts. Real-time payment processing is a means of recognizing credit card fraud. Instead of accepting payments and waiting for bank approval at a later date, real-time payment processing carries out transactions at the moment of purchase, in other words in real time. Real-time payment processing is an essential requirement for all high-risk merchant accounts.

2. Active Management and Account Customization

Standard merchant accounts offer you very little flexibility in managing your account, with predefined minimum amounts and limited methods of payment. High-risk merchant accounts, on the other hand, should offer features that make it considerably easier to control cash flow by allowing you to actively manage your account, including options to change payment schedules and manage your liquid assets.

3. Settling in Multiple currencies

All high risk merchant have to cater to multiple transactions from overseas, the internet has made it possible for a Brazilian to order goods from the states and vice a versa. Any good high risk merchant account you choose should and must cater to transactions in multiple currencies, and the option of finally settling outstanding dues in a currency of your choice. If you are a UK based dealer and you are receiving payments in dollars, a high risk merchant account should allow you the facility of cashing in your payments in pounds, where as levying very little transaction and conversion fees.

4. Fraud scrubbing

Fraud scrubbing refers to a complex and highly technical system of risk assessment that is used to predict the authenticity and reliability of transactions by checking them against a range of parameters. It protects users of high-risk merchant accounts from fraudulent transactions through statistical analysis, and factors in the value of transactions, so that high value transactions are given greater protection. Transaction fraud scrubbing is a points system that uses a host of different parameters to assess the risk of fraud in each card transaction, including the card's country of issue, previous transaction history, etc. This state-of-the-art technology, which is constantly being refined to offer greater protection to high-risk merchant accounts, accepts or declines transactions based on the risks involved, thus providing defenses against fraud from the very first step, transaction authorization. To ensure increased security against credit card fraud, transaction fraud scrubbing attempts to carry out high-risk transactions in real time.

The fee for setting up and maintaining high risk merchant accounts can differ considerably according to the provider, risk involved and the type of the business. Usually the setup fees for these accounts are quite similar to other merchant accounts, often around $500. Some providers may charge you as much as $7000. The transaction fee (around $0.5), discount rate (around 6.5% to 9%), rolling reserve (10% to 15%), and monthly/weekly settlements are usually higher than those of usual onshore merchant accounts. Most high risk merchant account providers do not demand any security or guarantee deposits. All high risk merchant accounts are multicurrency accounts.