High risk merchant accounts have similar pricing component as non-risk high risk accounts. The main difference in pricing elements is reserves, which are required for high risk accounts but are generally not for a non-high risk accounts.
Here are 6 elements which comprise rates for high risk merchant accounts.
- Discount rates. A discount rate is a fixed percentage of the value of each transaction processed through a high risk merchant account. Generally, an acquiring bank that accepts a high risk merchant account will charge a premium to cover the increased risk associated with processing.
- Transaction fees. A transaction fee is a flat amount per transaction. High risk merchant accounts include more extensive fraud fighting tools, which can drive up the cost per transaction compared to non-high risk merchant accounts.
- Monthly statement fees. The monthly fee is usually similar for high risk merchant accounts and non-high risk merchant accounts. Be wary of companies which charge expensive monthly fees because these are simply extra profit to the provider and no benefit to the merchant.
- Gateway fee. A gateway is a secure connection between high risk merchant accounts websites and the processing network. In some cases a high risk merchant will connect directly to a payment processor. In this instance, no gateway fees apply.
- Setup fees. In most instances high risk merchant accounts in the US do not have a setup fee. Some international banks assess a small setup fee once the high risk merchant account is approved, before live processing begins.
- Reserves. Reserves are funds set aside against potential chargebacks in high risk merchant accounts. Reserves for a high risk merchant account range from 5-10%. Reserve accounts can be renegotiated once high risk merchant accounts have established a payment processing history with the bank.
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