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.
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.
A high risk merchant account is a type of payment processing service that is designed for businesses that are considered to be at a higher risk for credit card chargebacks, fraud, or other financial issues. These businesses may include online gambling, adult entertainment, multi-level marketing, pharmaceuticals, and other industries that are considered high risk due to the nature of their products or services.
There are a number of merchant account providers that specialize in providing high risk merchant accounts to businesses that may have difficulty obtaining traditional merchant services. These providers typically charge higher fees and may have stricter underwriting requirements compared to traditional merchant account providers. However, they can also provide valuable support and assistance to businesses that are struggling to find payment processing solutions due to their high risk status.
Some examples of high risk merchant account providers include Durango Merchant Services, EMB, and High Risk Solutions. It’s important to carefully research and compare different providers to find the one that best meets your business’s needs and budget.
For businesses that are deemed to be high risk for a variety of reasons, such as having a high number of chargebacks, operating in a high risk industry, or having a bad credit history, a high risk merchant account is a type of credit card processing account is reserved. Online gambling, adult entertainment, timeshare resale, and travel agencies are a few examples of high risk sectors that could be taken into account for high risk merchant accounts in Europe. Other elements that could be taken into account when deciding if a company is high risk include its size, credit history, and the kinds of goods or services it provides.
Which companies or industries considered to be high risk?
Several different elements can affect whether a business or sector is regarded as high risk. The following are some of the more typical ones:
- High number of chargebacks: A high percentage of chargebacks, or cases when a client rejects a charge on their credit card and requests a refund, may be a sign that the business is more vulnerable to fraud or other financial hazards.
- Working in a high risk industry: Due to the nature of the goods or services they provide, the potential for fraud, or other financial concerns, several industries are deemed high risk by banks and other financial institutions. The resale of timeshares, adult entertainment, and internet gambling are a few examples of high risk sectors.
- Poor credit history: Financial institutions may view a company with a poor credit history as a higher risk due to the likelihood that it would default on loans or other financial obligations.
- High ticket items: Due to the possibility of fraud or chargebacks, businesses that sell high price items, such as luxury goods or expensive technology, may be thought of as carrying a higher risk.
- New or startup companies: Due to their lack of experience and potential for financial instability, new or startup companies may be viewed as carrying a higher risk.
- Business operations abroad: Due to the increased complexity and risk of fraud, companies that offer goods or services to clients in different countries may be deemed to be at higher risk.
- Gaming and gambling industries.
- Credit card to crypto payment gateways are an important development in the world of cryptocurrency, offering a convenient and accessible way for users to purchase cryptocurrency using their credit cards. With the increasing adoption of cryptocurrency, these gateways are likely to become more mainstream, leading to a more widespread use of cryptocurrency in daily transactions.
How high risk payment gateway works?
A sort of online payment processing service called a high risk payment gateway is created expressly to manage transactions from high risk merchants. Similar to other payment gateways, these ones enable retailers to take credit cards and other forms of electronic payment from their clients.
The payment gateway handles a transaction when a customer makes a purchase on a merchant’s website and gets in touch with the customer’s bank to confirm the payment. The funds are sent from the customer’s account to the merchant’s account, less any fees or charges, if the payment is approved.
A high risk payment gateway differs significantly from a standard payment gateway in that it is frequently more expensive due to the higher risk of fraud or chargebacks. High risk payment gateways could also have more stringent underwriting standards and ask for more information or paperwork from merchants in order to set up their accounts.
What are the best merchant account providers in Europe?
In Europe, there are numerous different merchant account providers who supply businesses with a variety of credit card processing and other payment services. Among the most well-known suppliers are:
- Worldpay: Worldpay is a global provider of payment processing services. It provides a number of payment options, such as point-of-sale systems, e-commerce solutions, and credit card processing.
- Adyen: Adyen is a provider of payment solutions, including point-of-sale systems, mobile payments, and credit card processing.
- Stripe: Stripe is an online payment processing business that provides a variety of payment services, such as processing credit cards, accepting payments via mobile devices, and issuing invoices.
- PayPal: PayPal is a well-known online payment processing business that provides a variety of payment services, such as processing credit cards, accepting payments via mobile devices, and issuing invoices.
- Sage Pay: Sage Pay is a provider of payment processing services, including credit card processing, e-commerce solutions, and point-of-sale systems.
- To select the one that best satisfies the requirements of your company, it is crucial to investigate and contrast several merchant account providers. When selecting a supplier, you should take into account elements like costs, client satisfaction, and the kinds of payment services provided.
Due to the higher risks involved in processing payments for high risk firms, high risk merchant account providers may demand higher fees. Chargebacks are more likely to occur with high risk organizations, and these can be expensive for the merchant account provider. High risk firms can also need more compliance and fraud protection measures, which could raise the fees for the merchant account provider. In order to provide services to a high risk firm, the merchant account provider may need to assume additional financial risk, which could result in higher fees.
Depending on a number of variables, including the type of business, the volume of transactions, and the degree of risk involved, the fees charged by merchant account providers can vary significantly. The following are some typical fees that merchant account providers may impose:
- Account setup costs: These are upfront costs associated with opening a new merchant account.
- Fees on a monthly basis: Many merchant account providers impose a fee on a monthly basis.
- Every time a consumer uses their credit or debit card to make a purchase, transaction fees are levied.
- Fees for processing chargebacks: If a consumer demands a refund after contesting a charge, the merchant account provider may levied a fee.
- Fees for fraud protection: In order to help stop illegal transactions, some merchant account providers may charge extra fees for fraud protection services.
- In order to locate the most affordable solution for your company, it’s critical to thoroughly evaluate the costs that a merchant account provider is charging and take into account how they compare to the prices charged by other providers.
What do they offer high risk merchant accounts in Europe?
High-risk merchant accounts are made for companies that work in sectors that are thought to be high-risk due to things like higher chargeback rates, possible legal problems, or regulatory scrutiny. High-risk merchant accounts are offered by several specialized providers and banks in Europe. Although the specific services may differ, some common features and benefits are as follows:
Acceptance of high-risk companies: These suppliers focus specifically on high-risk sectors and are prepared to cooperate with companies that other suppliers might turn down.
- Multi-currency processing: High-risk merchant accounts in Europe frequently offer this feature, which can be very important for businesses doing business internationally.
- Integrating a merchant’s website or e-commerce platform with a secure payment gateway is simple thanks to the services that providers offer.
- Tools for preventing fraud: High-risk providers frequently provide sophisticated tools for preventing fraud to help merchants reduce chargebacks and safeguard their businesses from fraudulent transactions.
- Chargeback management: High-risk merchant accounts frequently include chargeback management services that aid retailers in successfully disputing and resolving chargebacks.
- Flexible terms: To meet the specific requirements of high-risk businesses, some high-risk merchant account providers offer flexible terms, including contract lengths and pricing structures.
- Customer support: To assist merchants in navigating the challenges of high-risk payment processing, high-risk providers typically provide specialized customer support.
- In order to maintain security and trust, high-risk providers make sure that their payment processing solutions comply with the Payment Card Industry Data Security Standard (PCI DSS).
What is considered a high-risk merchant account in Europe?
A high-risk merchant account is a specific kind of payment processing account given to companies that operate in markets that are regarded as high-risk for a variety of reasons. Businesses may be deemed high-risk in Europe for the following reasons:
- High chargeback rates: Businesses in high chargeback rate industries are frequently viewed as high-risk because chargebacks can result in losses for banks and payment processors.
- Legal and regulatory issues: High-risk industries can be defined as those that are subject to significant legal restrictions, regulations, or potential legal issues.
- Reputational risk: High-risk industries may include those connected to contentious goods or services or those where there is a higher chance of customer complaints.
- Financial risk: High-risk industries may include those that have a higher chance of bankruptcy, financial instability, or significant revenue fluctuations.
- High fraud rates: High-risk industries can be defined as those that are particularly susceptible to fraudulent transactions or cyberattacks.
Examples of sectors that are frequently viewed as high-risk in Europe include:
- Gaming and gambling online
- Adult amusement
- sales of cigarettes and e-cigarettes
- Trading of cryptocurrencies and digital assets
- Online pharmacies and dietary supplements
- ticketing and travel services
- Direct selling and telemarketing
- Credit repair and debt collection
- sales of weapons and firearms
- high-end luxury items
- recurring payments for services
How much does a high-risk merchant account in Europe cost the merchants?
Depending on the provider, the nature of the business, and the specific services required, the price of a high-risk merchant account in Europe can change. However, compared to low-risk merchants, high-risk merchants typically pay higher fees. A high-risk merchant account may have additional fees that include:
- Setup fees: To open a high-risk merchant account, some providers charge a one-time setup fee. Depending on the provider and how difficult the setup process is, this can range from a few hundred to several thousand euros.
- Monthly charges: High-risk merchants might need to pay a monthly charge to access payment processing services and maintain their accounts. These charges may cost as much as €100 per month or up to €20.
- Transaction fees: Compared to low-risk merchants, high-risk merchants typically pay a higher per-transaction fee. Depending on the provider, transaction volume, and industry risk level, these fees may be as high as 6%.
- Chargeback fees are assessed for each chargeback that a customer initiates and may be higher for high-risk merchants. These costs per chargeback can range from €20 to €50 or more.
- A rolling reserve, or a portion of the merchant’s sales held by the payment processor as security, may be required by some high-risk merchant account providers. This reserve is typically held for a predetermined time period, typically between 3 and 6 months, and can range from 5% to 15% (or even more) of the merchant’s sales.
- Fees for using a physical terminal or a payment gateway for card processing may be charged to merchants. Depending on the provider and the precise services required, these costs may change.
- Fees for PCI compliance and other security-related activities: High-risk merchants might be expected to cover costs for upholding PCI DSS compliance or other security measures required by their sector.