How Does A Merchant Account Provider Evaluate Risk?
Evaluating risk depends on the requirements of the bank or financial institution that will be processing your transactions. Below is a list of items that most banks or institutions consider when underwriting any business for a merchant account.
Industry – There are many different categories of industry and each industry is evaluated by a merchant account underwriter for perceived risk. The following examples can help give an idea of which risk category a business may fall under and it is important to know that an application can be rejected during the Underwriting process specifically based on the industry that a business falls under regardless of other factors on the application.Some businesses that are extremely difficult to underwrite for include many online auction websites, online pharmacies, online gun stores, businesses involved in tourism, businesses who sell health and nutrition supplements or businesses who sell products with broad health claims.Please check the Prohibited Merchant/Prohibited Substance List if there are any doubts on what will be accepted.
Low Risk Merchant Accounts – These businesses are typically restaurants and retail businesses.
Medium Risk Merchant Accounts – website or retail stores that sell health and beauty products, telecommunication and utility services, lawyer offices and political organizations.
Higher Risk Merchant Accounts– gyms, insurance agencies, handmade apparel and jewelry, charities, businesses who have monthly memberships or subscription-based services, web development or gaming development businesses