To accept credit card payments, whether offline or online, a merchant account is required. For some merchants, particularly those that are online, their industry is considered to be a high risk for the bank providing the merchant account. Typical high risk industries include:

 

Auctions

Travel

Adult

Pharmacy

Multi-Level Marketing

Telemarketing

ISP & Webhosting

Loan Services

 

Industries such as these are considered to be a high risk for a variety of different factors. Most commonly, it is due to a higher risk of chargebacks and returns. However, it may also be due to a higher rate of credit card fraud. Another reason is that providers often do not wish to be associated with a particular industry (adult for example) due to fears of negative publicity.

 

While banks do offer merchant accounts, it can be tricky trying to obtain one as an online merchant – particularly if you are high risk. Fortunately there are third party providers that have relationships with numerous banks and as such can ‘spread around the risk’. Due to the higher risk you will be subject to higher payment processing fees than businesses that are more traditional or lower risk. However, specialist high risk processors need to have advanced fraud prevention tools in order to be able to minimize risk and continue processing – which means a lower chance of chargebacks and lost income for you.