What are the differences between High Risk and Low Risk merchant accounts?

What are the differences between High Risk and Low Risk merchant accounts?

Today, two main aspects of this topic will be considered:
• Main differences between High Risk and Low Risk merchant accounts.
• We learn the role that charge-backs play in determining the degree of risk.
Main features of merchant account of low risk
This category has the following parameters:
• The average monthly amount of funds received as a result of sales does not exceed 20 thousand US dollars.
• When making transactions, the party accepts payment in only one currency.
• The average amount of credit card transfers does not exceed 500 USD.
• Among the goods that you sell, the following categories are listed: stationery, clothing, household goods, books with a low degree of risk.
• The payment service provider is your payment page.
• As a fraud prevention program, you use 3D Secure.
• You live in a country that is a low-risk group (in this list, most of the Western countries are Canada, the United States, European countries, and Japan and Australia).
• The number of refunds or your products is minimal.
Main parameters of merchant account of high risk
This group of accounts is characterized by the following aspects:
• As payment for your goods, you accept settlements in several currencies.
• You carry out your sales seasonally, or with a certain periodicity.
• You are a new merchant with a small number of credit card transfers.
• You are listed in the MATCH due to the extremely large number of refunds.
• You sell your products on the territory of countries that are not on the list of low risk states of fraud (mentioned above).
• Your credit history is negative (there were cases of late repayment of loans, etc.).
• In a month you sell goods worth more than 20 thousand USD.
• The average amount of credit card transfer exceeds 500 USD.
• Your activity is related to the industry, in most cases related to the high-income sphere (or frequent refunds of money to the buyer).
The mechanism for assessing the risk of merchants by acquirers
This procedure is subjective. During its implementation, the acquirer takes into account a large number of different parameters. As services and products with a high degree of risk, the following is considered:
• Everything related to gambling (casino, etc.).
• Dating services.
• Telemarketing.
• IP-telephony.
• Pharmaceutical industry (pharmacies).
• Financial services (investments, etc.).
• Hypnosis.
• Psychiatric industry.
• Goods and services belonging to the category “for adults”.
• Electronic type cigarettes.
• Software, the use of which may entail copyright issues.
• Counterfeit (counterfeit products), created on the basis of the design of the original product, the implementation of which entails copyright problems.
• Subscriptions to printed publications (magazines, etc.).
The consideration of each business area is carried out by the acquirers individually. At the same time, it may be found out that not all spheres from the above list belong to a group with a high degree of risk. Also, a large number of business areas that have not been included in the above list may be of high risk.
The main criteria for the evaluation of products or services by the acquirers
• Will a large number of refunds be a problem?
• Will a certain entrepreneurial industry attract undesirable advertising to banks, which will affect its reputation in a negative way?
• Will the conduct of a certain business cause possible liabilities of a financial or legal nature?
The definition of a business in a high-risk group can occur based on a variety of factors. But the attribution of a certain industry to the risk group is not carried out on the basis of only a large number of refunds.