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High Risk Merchant Account in Europe 2020

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High Risk Merchant Account

With a merchant account the account holder receives a bundle of payment processing services including the necessary hardware and software for accepting card transactions. When a customer makes an online purchase from the merchant’s website – the payment gateway facilitates the accepting of the payment details and fraud checks – the funds arrive in the merchant account and when the payment is approved by the payment gateway they are sent to the merchant’s business bank account at an acquiring bank. Merchants have no control over a merchant account, it is simply a holding place for funds until the transaction is approved.

High Risk Merchant Account:

All online businesses need a merchant account in order to accept online card payments. If banks refuse to give them a regular merchant account, then the company can apply for a high risk merchant account. High risk merchant accounts perform the same function as a regular merchant account but because the bank is taking a higher risk they impose higher fees and charges as well as stricter contract conditions. With high risk merchant accounts, the bank may use risk management strategies like a rolling reserve, to protect the bank and the merchant from potential losses.

Do you Need a High Risk Merchant Account in Europe?

If you have tried to open a European merchant account or take on a payment gateway for your online business and been rejected, then a high risk merchant account could be your answer. Most banks and payments providers today tend to reject new online businesses in high risk industries. These financial service providers don’t want to take on new clients just to find that money comes into the company’s account and straight out again through chargebacks or refunds. This could put them in danger of penalties from their regulators and could even lead to the loss of their banking license.

Best High Risk Merchant Bank Accounts in Europe for eCommerce?

Lucky for high risk internet companies there are excellent banks and financial institutions that provide high risk merchant accounts as well as payment gateways, payment processors, EMIs and merchant banks that are accustomed to working with high risk online companies. However, this comes with high rates and fees and stringent contract conditions. Some banks target high risk businesses that are desperate to be approved for a merchant account and deliberately offer them a high risk merchant account at exorbitant fees and conditions. This makes it difficult to find the right financial service provider for your company. Although it may take you longer to find the right provider and you will have to agree to higher rates and fees you don’t need to settle for bad service or a bank that treats you with disdain.

Offshore High Risk Merchant Account Providers

An offshore merchant bank account is one established for ecommerce companies in a non-resident country. Internet businesses with offshore merchant accounts can process payments made on their websites. Many ecommerce businesses, particularly those in high risk industries, find it difficult to open a merchant bank account in their country of residence. European banks tend to be conservative and apprehensive about opening accounts for internet businesses which often cannot produce the necessary documentation or proof of transaction history. The European banks inevitably label internet companies in certain high risk industries as high risk companies and are not interested in giving them an account. This can leave companies with no choice but to open an offshore merchant account. Offshore banks tend to be more lenient and discrete about accounts transferring funds across the globe. Offshore merchant accounts also enjoy the low tax in offshore jurisdictions. Ecommerce companies that often opt for offshore merchant accounts include gaming sites, electronic cash, travel website, biotechnology, adult entertainment, sportsbooks and online drugstores.

Why are there High Risk Merchant Accounts for Some Businesses?

Each bank has policies which determine which business industries are considered too much of a risk to take on as customers. A business may be rejected by one bank but accepted by another, depending on the individual bank’s policy. Businesses classed as high risk can be refused a regular merchant account and have no choice but to open a high risk merchant account in order to facilitate accepting card payments on their website. The factors determining whether a business is high risk or not are often in flux and businesses that were considered low risk one year may find themselves considered high risk the next and need to find a specialized card processor.

Is there Such a Thing as a Guaranteed Business Bank Accounts for High Risk Businesses?

There are no guaranteed business bank accounts for businesses involved in high risk activities. It is not so simple t open business bank account to gaming company. The parameters that determine whether a business is considered high risk plus KYC and AML procedures may make it impossible for a business to find a bank willing to accept them as a customer. It is at the bank’s discretion and banks cannot divulge a customer’s risk assessment to the customer. With no guaranteed business bank account high risk businesses will often find offshore merchant accounts more easily obtained.