What are High Risk Merchant Accounts and Merchant Services?

A high risk merchant account is a type of bank account that allows businesses to accept payments by debit or credit cards, while merchant account services are simply all the related services, such as credit card transaction processing or account balance and activity reporting that assist the merchant with accepting credit cards as payments, both online and off.

Thus, there are three main players involved with high risk merchant accounts: the merchant, the merchant bank, and the credit card processor.

What Kinds of High Risk Merchant Accounts Exist?

There are several types of high risk merchant accounts, and the choice of which one to open really depends on the kind of business under consideration.

The first option is the standard, "brick and mortar" point-of-sale merchant account. These accounts are suitable for most businesses and they work with both stand alone credit card terminals as well as computer interface or internet-based terminals, such as virtual terminals.

The second option is for any business involved in e-commerce that will be accepting credit card payments online. An Internet merchant account is specifically designed to handle online payment processing of credit cards. Usually, the account fees with this type of account are higher since there is a greater risk associated with on-line payment processing.

Finally, there is a Mail Order/Phone Order (MOTO) merchant account, which is suitable for any business that wants to process credit card payments via mail or over the phone.

Why Open a Merchant Account?

Even with the added expenses associated with having a merchant account, the increase in sales and customer convenience may more than make up for it. Without a merchant account to accept credit and debit cards, customers will be forced to pay by cash or check. Human nature dictates that customers are more likely to increase their spending if they can worry about the bill later.