Most banks and processors consider some types of businesses to be high risks. Such business may be such as pharmacy merchant accounts, travel merchant accounts, telemarketing merchant accounts, adult merchant accounts, and internet merchant accounts among many others. The reason as to why the possessors and banks deem such accounts to be high risk is because they have so much potential for some excess charge backs, returns, some possible legal violations or also some bad publicity for accepting such kinds of businesses. In most cases, high-risk merchants usually find it hard to open the merchant accounts. You should be keen to know that banks and other processors have very tough laws when it comes to high-risk merchant accounts. Learn more about ecommerce payment processing or read the importance of having a merchant account for high risk business.
The banks and processors will definitely have to evaluate the merchant's case regarding some important information such as the amount of time that he has been in that business, how his credit history is and any other merchant accounts that he has had in the past if any. During such a time, the period of time that the merchant's business has been in operation would make a very big difference. In case the business in mention has been in operation for a long time, that is a kind of assurance to the provider of the merchant account. That is to mean that the merchant has a very good understanding of how to run a business and any high risks that he or she is capable of getting. The other important thing to note is that the providers have to go through the merchant's credit report.
The reason for that is so that the merchant can be able to repay loans and also show all the data on bad credit if there is such, like bankruptcy. Having a higher credit score means that the merchant also has higher chances of opening his account. In case a person has had a merchant account in the past, the way in which he has operated and managed his account would show in a positive or negative manner on the one he applies afresh. In case the provider or the merchant had stopped the operation of the previous merchant account, the records will also reflect that. The providers are also able to verify important information such as charge backs on the previous account belonging to the merchant and any payment which has been defaulted. If he gets a lot of information concerning this, he gets fewer chances of the merchant opening a high-risk merchant account.