When It Comes To High-risk Merchant Accounts, What Is The Annual Fee?

According to the results of a poll conducted in 2021, 56 percent of those who responded used a credit card to accomplish an online transaction in the United States. Firms must have a merchant account in order to take online payments; yet, setting up a merchant account may not be straightforward for many businesses. Those deemed high-risk enterprises must work with a high-risk merchant processor and may be subject to increased account fees as a result of this.

It can cost up to $1,800 per year on average to maintain a high-risk merchant account, which includes an initial merchant application price of $100-$300 as well as credit card processing, chargeback, and other incidental costs, on top of the original merchant application fee. However, depending on the supplier you work with and the industry in which you operate, this number can be significantly higher or lower.

Fees for High-Risk Merchant Accounts, to Give You an Example

Many high-risk merchant accounts are accompanied with long-term contracts that contain a lot of fine language, which can be confusing. They may raise rates from time to time, or charge additional fees if you want to transfer service providers or violate their terms of service agreement. In addition to setup costs and processing fees, there are a number of other fees to consider:

Chargeback fees are a type of fee that is charged when a chargeback occurs.

Payment processors typically charge between $20 and $30 per chargeback for organizations that are considered low-risk. Unfortunately, high-risk enterprises will almost always have to pay significantly more than this. It is possible that a consumer will opt to dispute a transaction on their credit or debit card, which will generate complications.

Those that have chargeback ratios more than 2 percent may have their accounts cancelled by their processors, therefore chargeback protection can be extremely beneficial.

Fees for PCI Compliance

Most high-risk merchant accounts charge a PCI compliance fee in order to protect sensitive financial information from being stolen or lost. Consequently, shops and organizations are provided with the necessary protection to limit the likelihood of information theft.

On a monthly or yearly basis, PCI fees are typically assessed. Although the amount varies depending on the provider, high-risk merchant account fees are typically around $120 per year.

Because being classified as a high-risk merchant can result in increased risks in payment processing as well as increased prices, it is critical to evaluate services in order to identify the supplier that offers the best value for money. Need help? Visit processingcard.com.

Pertaining to High-Risk Merchant Accounts

Many processors and financial institutions consider certain sorts of enterprises to be high-risk. Travel merchant accounts, pharmaceutical merchant accounts, adult merchant accounts, telemarketing merchant accounts, Internet merchant accounts, and other similar enterprises are examples of this type of business.

High risk accounts are considered by banks or other payment processors because of the possibility for excessive chargebacks, probable legal infractions, refunds or simply negative reputation associated with admitting such types of organizations as customers. Merchant accounts for high-risk merchants are frequently difficult to obtain, particularly in the United States.

Banks and other payment processors are subject to severe regulations when it comes to high-risk merchant accounts. Certain facts about the merchant's case, such as how long he has been in business and his credit history, as well as information about other merchant accounts he has previously held, will invariably be considered.

Typically, the length of time that the merchant's business has been in operation would make a significant difference in this situation. If his company has been in operation for a significant period of time, this would serve as a source of assurance to the merchant account provider. It would imply that the merchant has a reasonable understanding of the complexities of running a business as well as the high risks that are inherent in the industry.

Additionally, suppliers typically check the merchant's credit report. This is done to determine his ability to repay debts and to provide any information about his credit history, such as bankruptcy. A higher credit score would imply that the merchant's prospects of opening an account are also higher as well.

For someone who has previously owned a merchant account, the manner in which he or she managed his or her previous account would have an impact on whether or not his or her present application was approved. If the previous merchant account was terminated by either the merchant or the service provider, this will be noted in the records.

Information on default payments and charge backs on the merchant's previous account would also be verified by the service providers. The greater the number of these he has, the less likely it is that the merchant will open a high-risk merchant account.