Many people are afraid of owning a high risk account because it sounds like too much work. They think that they need to constantly monitor the market and have an extensive knowledge of financial markets in order to succeed.
This is not true, however, because high risk merchant accounts can be beneficial for investors who want to take risks with their funds while earning potentially high returns. Even beginners can find success with high risk accounts if they follow the right steps. In this article you’ll learn the pros of owning a high-risk account.
- A Higher Interest Rate Is Offered By Banks For These Types Of Accounts
When you open a high risk merchant account, you are offered a higher interest rate of return. This is because the bank has to take more risks when giving you this type of account and they need some compensation for that risk. Banks know that many businesses fail in their first year so it’s okay if you don’t meet your credit line within the time limit set by them.
The most important thing is making sure that everything goes smoothly during those first twelve months, since the bank will be able to make money from fees any other way, but only up until your 12-month mark.
A higher interest rate means you’ll get more money out of your account every month. This means it’s worth opening a high-interest, short term CD or savings account. If you don’t need the money for an emergency, this can be better than losing interest to inflation while saving in a low rate bank account. The longer timeframe also allows for higher returns on investments when compared with other types of accounts like stocks and bonds which are riskier.
- Higher Security Standards
Most high risk merchant accounts use many strategies to detect fraudulent activity and keep their customers safe. For example, when a customer charges back an order using the high risk card, most companies will hold that money for up to 90 days while they investigate fraud claims.
They use algorithms or human reviews to determine whether it is fraudulent activity or not. If there are any doubts about if it was legitimately charged, then they will refund the chargeback amount without requiring more information from the consumer.
The fewer fraudulent activities your business experiences, the more money you stand to make. There have been reports of American-owned businesses experiencing as much as a 50% increase in revenue after implementing such high risk accounts into their business models.
It might seem counterintuitive at first glance, but there is some logic behind it: people want goods and services from places they know are reputable. The higher the perceived “high risk,” often means that a company has stricter standards for employees or suppliers which can result in less fraud overall.
- Protection Against Chargebacks
Chargeback protection is a potential benefit of owning a high risk merchant account, but the consumer must be vigilant to avoid having their money taken by scammers. If you are using a third party processor for processing transactions – such as PayPal or Stripe — then they may offer chargeback coverage.
However, if your company does not have its own in-house payment gateway that processes payments and takes care of fraud prevention internally (i.e., without relying on external processors), then it’s possible for something like ecommerce fraud to occur. That’s likely to happen if someone makes an unauthorized purchase with stolen credit card information.
There are many benefits to owning merchant account high risk. Some of these benefits include higher returns and lower financial risks protection against chargebacks and higher security standards than other types of accounts.