Every business is the landscape is segregated into a high-risk and a low-risk one. The segregation is done because more and more people have started shopping online and every business must develop systems that can accept payments online. This is where a merchant account comes into play. Whether you are dealing with national payments or cross border payments, a merchant account becomes a mandatory thing for your business.

A merchant account is an advanced e-commerce solution that helps businesses accept payments. Whether you are into B2B or B2C, or you are dealing as a non-resident company abroad, having a merchant account will help you ensure that all the transactions happening are safe and secure. That said, merchant accounts are not only necessary for online transactions, but offline sales also need a merchant account.

In the absence of a merchant account, it is no longer possible to imagine a single online business. The merchant account shall allow you to accept payments around the clock from any part of the world, regardless of the working hours of banking institution or time-zone of the country.

Your customers can complete the transaction at night, on a public holiday hassle free and this is the biggest benefit of having a merchant account by your side.

As we stated earlier, there are three types of merchant accounts, high-risk, medium-risk, and low-risk. Now let us tell you how banks determine the risk level for businesses.

Banks consider a company as high risk when,

  • The business is a start-up.
  • The business is dealing in a risky industry, where chargebacks are more.

As the percentage of chargebacks go beyond 1%, the merchant has to incur high processing fees. It mostly happens with companies in financial difficulties, companies with a bad credit history, dealing with questionable goods and services, and more.

Foreign banks consider a few areas as high-risk products and services, such as casino or internet gaming, dating services, sale of medicines, sale of jewelry, lending, telemarketing, adult content, and so on.

No matter what kind of business you are dealing in, your bank will always keep an eye on you. It will constantly monitor your activity in order to verify the fulfilment of all the terms of the contract that you signed with them earlier.

While the businesses we stated come under the high-risk category, but this is not an exhaustive list. Depending upon the dealings and transactions of a business, a business can enter into high-risk zone or can remove its name from the high-risk zone as well. So, make sure you are indulging into fair practices when it comes to online transactions.

If you are worried about your cross-border payments, you can reach out to us.