DO THE BANKS LIKE HIGH RISK BUSINESSES?
A business is considered to be “high
risk” when there is a higher potential
to cause financial loss to the bank than
other businesses. There are many owners
of high risk businesses who still wonder
if they will be able to get a merchant
account for their business. However, it
is possible to get a merchant account
for your high risk business and it is
called as “High Risk Merchant Account”.
There are lot of restrictions for a
“High Risk Business” to get a merchant
account. Therefore, it is advisable to
take the advice of an expert. He will
know exactly how risky your business is
and then put forward the right points to
the right banking officer. Also, you may
want to have the merchant accounts to
work at more than one geographical
location and jurisdiction. Like all
other business operations, some degree
of redundancy will protect you and your
business from future mishaps.
What is it about high risk businesses
that worry the banks?
The answer is very simple. All Banks are
highly concerned about the high level of
chargeback’s that occur in these
businesses. A chargeback is nothing but
a dispute from the credit card owner to
get his funds back due to various
reasons. The customer has up to 180 days
to file a complaint about a transaction.
As a result, the bank is responsible for
any liabilities that may occur until 6
months of any purchase.
There are several reasons for a customer
to file for a chargeback. Only a few of
them are valid. For example, a customer
hasn’t received the merchandise that he
has paid for or even unhappy customers
will file for chargeback’s. When the
customer calls the bank and files for
the chargeback then the merchant has to
pay for it. He will also have to pay
fines for the chargeback’s.
In most of the cases neither the
consumer nor the business can be blamed
for the chargeback’s. The chargeback’s
can happen because of cybercrime, fraud
and identity theft.
The highest number of cases occurs due
to identity theft. Every year many
million Americans get affected due to
identity theft. The stolen information
is available on the net for as less as
The merchants can also dispute
chargeback’s and can also win it.
However, every chargeback that is filed
against a merchant is seen as an
unsatisfied customer by the bank. When
this reaches a high level then the banks
get worried. This is why the banks put a
cap on the number of chargeback’s for
each merchant, which is 1%.
It is the fact that there is much more
chargeback’s than the 1% in case of
“High Risk Businesses” which is a cause
of concern for the banks. Therefore, any
bank will hesitate to do business with
such businesses. However, all hope is
not lost because you can open the “High
Risk Merchant Account”, mostly provided
by 3rd parties or other
one of our helpful account
representatives to assist you in the
high risk merchant account or
offshore merchant account for a
high risk merchant.