First of all, the most important question a merchant should know is “exactly what is high risk”? When interviewed, a vice president of one of the nation’s largest merchant services providers stated, “the first litmus test is what is being sold. Is this an item that I can hold in my hand, or a widget? Or, is this a concept, service, or idea where in which customer satisfaction is a subjective term ?”In easy talk, is your service easily susceptable to chargeback?
Other reasons for a business to be deemed high risk may be due to a merchant’s personal credit. Why does personal credit come into play ? Well, let us examine. Over 90% of all high risk businesses are either internet based or moto (mail order / telephone order). Example: when a client orders a CBD product, the merchant has no concept as to who the patron actually is. In addition, the credit card is not physically present. Therefore it is a higher risk than a face to face / retail transaction and the CBD business will need a high risk CBD merchant account. In banking, higher risk equals higher rate. In the unfortunate event that the transaction, card or even the patron are not who they present themselves as, the transaction is void. This means that the merchant would have to return the funds received. This scenario is one of the primary reasons why a merchant’s personal credit becomes an issue.