High Risk Merchants Accounts are accounts that allow merchants to accept credit card as payment when the merchant does not qualify for a standard merchant account.
Business types that are prone to customer chargebacks, fraud, or have questionably legal practices or products will often be forced to use a high risk merchant account provider and end up paying a higher rate for payment card transactions.
Below is a list of business types that are generally considered as “high risk” merchants.
Bad Debt Services
- Debt Consolidation
- Credit Counseling
- Credit Restoration/Repair Agencies
- Collection Agencies
- Loan/Mortgage Modification Services
- Credit Card Rate Reduction Services
- Financial Coaching/Restoration (Consulting or Software)
- “Chat” and “Gossip” Lines
- Horoscopes and Fortune Telling (Includes retail locations)
Dating & Escort Services
- Sports Forecasting/Odds Making
- Internet Gambling
- OTB (Off-Track Betting)(Generally excludes bingo, pickle cards & raffles for charitable purposes; i.e. Legit charities
Merchants Whose Product/Service May be Illegal
- Age-Restricted Products (i.e. alcohol sold via MOTO/Ecommerce without proper means of age verification)
- Tobacco Products sold via MOTO/Ecommerce
- Prescription Medications sold via MOTO/Ecommerce
- Medical Marijuana
- E Cigarettes
- Illegal synthetic marijuana supplements or “Teas”
- Paraphernalia Stores (either retail or moto) where over 50% of merchandise is for illegal purpose (water pipes, bongs, etc.)
Money Service Businesses
- Currency Dealer or Money Exchanger
- Check Cashing Services
- Dealer, Seller or Redeemer of Traveler’s Checks, Money Orders, or Stored Value Instruments
- Money Transmitter
- Any Organization Diverting Money out of the U.S.
Sexually Oriented and Pornographic Businesses, Materials/Services
- Adult Telephone Conversations/Audio Text (900 Numbers)
- Adult Book and Video Stores
- Adult Novelties
- Adult At-Home Parties (i.e. Passion Parties)
- Gentlemen’s Clubs
- Massage Parlors
- Male/Female “Enhancement” Supplements
- Charter Services
- Tour Operators
- Travel Agents and Brokers
- Time Shares and Time Share Related Businesses
- Travel-related Membership Clubs
- Cruise Lines
- Vacation Planners
Other Merchants Types
- Bail Bonds
- Multi-Level Marketing (MLM)
- Merchants Offering an Extended Product Warranty/Guaranty or Service Plans
- “Opportunity Merchants” using a “free/discounted trial period” / “pay for shipping only” model
- Online supplements or nutraceutical businesses using a “free/discounted trial period” / “pay for shipping only” model
The above list is from:
Because a merchant can begin accepting bitcoin in a matter of seconds (rather than having to apply with a payment card processor, and then wait), it would seem to be a valuable tool for a business startup that is of one of the types of merchants in the list above.
Even existing merchants would benefit from adding Bitcoin as a type of payment method they accept due to the difference in fees. Hgh Risk merchant accounts can be in the 8% to 10% fee range, or higher even. With bitcoin, the merchant receiving payment loses nothing on the transaction fees, and converting to USDs is under 1%. And then the bitcoin payments are non-reversible -- a significant savings there alone.
For a merchant in the travel category, for example, it would seem that bitcoin would bring significant benefits. The nature of the business is:
- High dollar amount transactions ($500 to $1,500 for an airline ticket alone).
- Price sensitive (Travelers shop around seeking a deal)
- Repeat customers (important, so you don't have to explain what Bitcoin is / how to use it).
- Online (can serve customers located anywhere, rather than having to draw just from a small collection of local customers who might be Bitcoiners)
One of the few options we currently have for travel are the gift cards from Spend Bitcoins good towards Southwest Air tickets:
Yankee is offering airfare and hotel discounts:
Are there any other categories from above where Bitcoin really should be finding traction as a replacement for (or complement to) high risk merchant accounts?