There are a number of reasons why merchants might be classified as being in a high-risk business and require high risk credit card processing. This article explains the ins and outs of high risk credit card processing, including the industries affected.

What Leads to Being Categorized as High Risk?

There are a number of factors that can lead to a merchant requiring high risk credit card processing, which may have to do with the type of business being engaged in, how the merchant receives orders (for example, it is always more risky when the credit card is not present, as in mail order or telephone order—MOTO— credit card processing), or other details of the merchants history.

• High-Risk Industries

—Adult products: online dating sites, escort services, adult DVDs & videos, adult toys, adult streaming video sites, adult products eStores, adult memberships sites

—Bail Bonds

—Debt/Collection Agencies

—Direct marketing

—Electronic Cigarettes

—Entertainment

—Gun dealers

—High Risk Mail Order Web Sites

—High volume merchant accounts

—Horoscope and fortune telling

—Infomercials

—Legal Gaming, casinos, sports wagering

—Loan modification

—Lotteries, competitions, and raffles

—Massage parlors

—Medical products: viagra / herbal supplements, diet programs, pharmacy merchants

—Membership clubs

—Membership services

—Multi-Level Marketing (MLM) services

—Online auctions

—Pawn Shops

—Pre-Paid Telephone Cards

—Subscription services

—Telecom

—Ticket sales

—Timeshares and real estate advertising

—Travel Business: Hotels, Travel Agencies

—Used automobile sales

—VoIP services

—Water filtration systems sales

—Weight-loss centers

• High-Risk Order Styles

—Mail order

—Telephone order

• High-Risk History

—Companies facing high credit card chargebacks

—High volume merchant accounts

—Merchant accounts that have been shut off

Any of these industries, styles of order taking, or histories can lead to a merchant needing high risk credit card processing.

About High-Risk Credit Card Processing

Because companies that handle high-risk credit card processing as a specialty know the risks involved, they can take measures to protect the merchant (and themselves) from fraudulent activities. In addition, applying to a high-risk credit card processing firm can prevent rejection by other merchant services providers who do not have this specialty.

However, many of these companies are offshore or international merchant accounts, rather than domestic banks. There are two approaches. In the first, the merchant applies to the high-risk credit card processing merchant service provider, meets the providers eligibility requirements, and is approved for processing. If the merchant does not meet the criteria, it is still possible that a third-party involvement can make the relationship possible.

It is very important when seeking high-risk credit card processing to make sure that you are clear on the criteria and the rates. Because there is more risk involved, the rates may not be favorable. Make sure there are no hidden fees. Also, choose a firm that communicates professionally in your native language. The English on some websites makes their explanations confusing and could lead to questions about whether they have the staffing to supply appropriate technical support and customer service, should you need to speak to them in English.

Related Article: Minimizing eCommerce Credit Card Fraud >>