How to Obtain a Merchant Account for High-Risk Niches
What is a merchant account and why is it necessary?
Payment processing is essential in operating a business. This process involves the following participants:
- Merchant or seller;
- Buyer;
- Issuer: the bank that issued the buyer's card;
- Acquirer: the bank where the payment is received;
- Processing center: provides communication between the transaction participants and ensures quick data processing;
- Payment system: an intermediary between the merchant and the acquirer.
The processing center processes transaction information: analyzes the security of the transfer, transmits payment data to the acquirer, and receives information from the issuer about the sufficient or insufficient amount of funds in the buyer's account. After confirming the payment, the funds are frozen in the client's account or immediately transferred to the merchant's account, and both the buyer and seller receive a notification of successful payment.
How do we determine the risk level?
Several common signs of a high-risk business may lead to declining the merchant account application. These signs include:
- A high percentage of refunds initiated by buyers;
- Sale of prohibited or low-quality goods and services;
- Lack of transaction history and company reputation;
- Company location in an offshore zone, jurisdictions with a high risk of fraud or financial loss, or in a country that is often the target of sanctions;
- Lack or poor credit history (both for the company and its owner);
- Seasonal activity indicating income instability;
- Handling suspiciously large amounts: sales of $20,000 monthly, each transaction amounting to at least $500;
- Use of multiple currencies;
- Subscription model, receiving periodic payments.
Obtaining a Merchant Account for a High-Risk Business
The following steps can help you choose a suitable high-risk acquiring service for your company and open a merchant account:
- 1. Compare available payment systems and choose the best and most trusted option.
- 2. Ensure your company’s website looks reliable, operates stably, and meets all security requirements.
- 3. Check popular platforms for negative reviews about your company and work on your reputation.
- 4. Contact a payment provider specialist to learn more about the cooperation terms and conditions.
- 5. Prepare the necessary documents. Provide data confirming the financial stability of your business.
- 6. Wait for feedback. If everything fits, the account will be opened.