Merchant Account Pricing

When looking for a merchant service provider, it is important to realize that not every provider will accept every business. There are some merchant service providers who will not accept certain types of businesses because of reasons such as jurisdictional regulations, high risk for sanctions, potential for high rate of refunds or chargebacks or because of low volume, or overly high volume, particularly if they are international charges.

Adult sites, including online adult sites are lucrative businesses, but they are not accepted by many merchant service provider companies because they are controversial. Rather than risk sanctions against the merchant service provider, or the public censure which may result from merchants which provides adult material, the merchant service provider will simply refuse to contract with the merchant to provide the service.

There are other types of businesses which are considered high risk by a merchant service provider. These might be such businesses as pharmaceutical companies, online casino or internet gambling companies, replica products, travel, e-wallet or e-cash, sports wagering, and online cigarette or tobacco products. Each of these businesses is considered high risk for one reason or another. For example, online casino or internet gambling companies and sports wagering are illegal in some jurisdictions. Pharmaceutical companies are often limited due to drug control laws. Selling cigarette or tobacco products to minors is illegal in many places.

All of these factors can combine to make it difficult for a merchant in one of these industries to apply for and receive a merchant account. There are several solutions to the merchant who has need of a merchant account while working in one of these industries.

Some merchants in these industries avoid the issue by misrepresenting their business to the provider in order to obtain a merchant account. It is obvious that this is a very poor and probably illegal solution and could result in a shutdown of the account and even more difficulty in obtaining a merchant account in the future.

Another option to a merchant in an adult industry or other high risk merchant category is to obtain an offshore merchant account. This option may cost higher discount rates and fees, simply because the offshore merchant accounts realize that these are accounts which may not be available to the merchant domestically. With offshore merchant account providers, and even with some domestic providers, the quality of service may be reduced, because these are high risk industries.

Some merchants in adult or high risk industries choose to use a third party payment processing solution. There are many of these providers available, and the same care should be used in selecting one of them for your merchant account payment process as for any merchant account. You should compare the track record of the third party payment provider, compare their fees and make sure there are no hidden costs to be discovered when it’s too late to avoid payment of them. It is unwise to sign a long term contract with any of the merchant account or third party payment providers.