The Types of A Merchant Account.
A merchant account is simply a contract that is made between a business and a financial institution like a bank. This contract entered into by the two parties ensures that the financial institution accept payments for the products or services as alternative way of paying for customers or clients of the business. Basically, these merchants acquiring banks will then see to it that a company can accept payments even those made abroad or from international clients, if any, for the products they deliver or services they render to them. It is therefore safe to say that merchant accounts is a vital part for businesses, especially the big ones.
There are two kinds of merchant account a business can choose from.
The first one is the normal account which is the type of merchant account where the merchant has a direct access to the card and they can ensure that the customer is legitimate so this of course means that the risk that is involved is very minimal. One other type of merchant account is when it is not at all a possibility for the business or the merchant to visually testify the client or the customer. Some of the accounts are but not limited to adult entertainment merchants, replica merchants, multilevel marketing merchants, and other transactions where transactions take place where the customer or client need not be actually or physically present for the transaction.
There is then a higher probability that fraud activities are much greater with the businesses classified in this type and this then result to having these types of accounts be classified as the “high risk” accounts. It is also undeniable that these high risk merchant accounts basically entails the risk of having the much unwanted charge backs for the banks that are in question. Because of these factors that are cited on top of anything else are some of the reasons as to why there is a reduction in the number of banks that are willing to or are open to take up high risk processing accounts.
It is indeed true that several years ago, a lot of banks are scared especially the small ones however, nowadays, a lot of big banks are ready to offer high risk merchant accounts.
These high risk merchant accounts that are being created are typically personalized accounts and the banks watch and observe them quite thoroughly they will, after some time, arrive at a conclusion or an idea as to what rates they should impose for every transaction the merchant and a customer or client entered into.
On top of everything, these banks that are offering high risk merchant accounts are highly encouraging merchants to open other accounts to ensure diverse payment process so that there will not be a problem or an issue if an account goes inactive or offline or other reasons.