High Risk Merchant Accounts are required for anyone operating a high risk business. But what exactly is a high risk business? That depends on who you talk to, obviously. But from the standpoint of a credit card processor, the first and foremost factors are scenarios where the customers credit is not present at the place of the transaction, and the credit card is therefore not swiped. This is the most basic factor that leads to the characterization of "high risk merchant" requiring a high risk merchant accounts. High Risk Merchant Accounts are required for anyone operating a high risk business

Other factors causing the "high risk" designation are discussed on this website and mostly revolve around the type of business and the perceived likelihood of excessive charge-backs.

High Risk Merchant Accounts are very difficult to get approved by traditional credit card processors or local banks. On rare occasions when these merchants get approved by traditional bank card processors, it is always with restrictions such as reserve accounts which are often so severe that a merchant can't possibly operate his or her business successfully. Many high volume high risk merchants open offshore merchant accounts to avoid these problems. Other restrictions include monthly volume caps and average ticket caps. Traditional credit card processing companies are simply not comfortable doing high risk business.

The easy way to eliminate these problems is simply to apply here

Types of Merchant Accounts & Payment Processing Gateways

Most all businesses need to accept credit cards to be competitive and to grow. But every business is different. Some businesses do transactions strictly face-to-face whereby the customer hands the merchant a credit card for payment and the card is swiped through a credit card terminal or through card reader attached to a computer.

Other businesses take mostly phone orders. In these cases, the merchant takes the credit card information over the telephone and then enters (or keys in) that information into a credit card machine (or credit card terminal) or computer.

And, of course, today many businesses operate online and internet business sales totals billions of dollars per year and it is growing daily. More and more businesses are operating online including business types we never thought possible. Who would have thought in the early of the internet in the 1990', for instance, that prescription eyeglasses could be sold online? But, today that, too, is a reality.

So there are various types of merchant accounts available to accommodate the various types of businesses.

Here is an overview of the 3 Basic Types of Merchant Accounts:

Swiped Merchant Account

These accounts are for face-to-face transactions where the credit card or debit card is present and are also called "card present" transactions. This type of merchant account will offer the lowest discount rates and transaction fees because they represent the lowest risk to the credit card processors and banks. Traditional swiped merchant accounts, where the merchant is face-to-face with the cardholder require that a high percentage, usually around 75% , of the credit card sales that take place are done with the actual "card present" and that the credit card be "swiped" by passing it through an actual credit card machine, or POS terminal.

Online Merchant Account or "internet merchant account"

These accounts do transactions using either a virtual terminal or a shopping cart system on the merchants website. Since the card is not present during online transactions, the risk of fraud is higher, so the rates are higher. The risk of excessive charge-backs is also higher, so the credit card processing banks charge higher fees to compensate for this increased risk. So, the higher the volume on non-swiped merchant accounts, the higher the risk to the credit card processor. Online merchant accounts use either a virtual terminal or other software system that is integrated into the merchant's website and which allows transactions to be done automatically and in real-time over the internet. This often includes the use of an internet "gateway" which enables credit card transactions to be done on a "secured" basis.

MOTO

MOTO, which stands for mail order/telephone order, are also non-swiped transactions. These older style non-swiped MOTO or Mail Order/Telephone Order accounts have higher rate and higher transaction fees just like Online Merchant Accounts. Both command higher rates than swiped merchant accounts. These type merchant services are for when credit cards are not present and are not swiped through a credit card machine. This would be the case in such circumstances as when the order is taken over a telephone or through the mail. In the past, merchants that had a MOTO merchant account would process the transaction by keying-in the credit card information directly into an old style credit card machine. But these days most of these type credit card transactions are done on either "credit card processing software" or on a "virtual terminal" on a computer.

Remember, the primary difference between these types of accounts are the discount rates and transaction fees which are charged to the merchants, and, of course, the way in which the actual transactions are submitted. Swiped transactions present less risk to the credit card processor so the rates are lower than with non-swiped accounts.