Wednesday, July 25, 2007

Underwriting High Risk Merchant Accounts

High risk merchant account providers hire an underwriter to help them assess whether an applicant should be approved for an account or not. Like a quality control personnel, an underwriter makes sure that the applicant passes the requirements outlined by the provider in its criteria of merchant account approval. Different MAPs have different criteria of judging whether a business is high risk or not. Among domestic MAPs, an applicant is declined if it is considered high risk. But for those who apply for offshore merchant accounts, the likelihood of getting approved is far greater.

The task of underwriting an application may be complicated, but there are criteria involved that make it easier. Underwriters are responsible for assessing how much rolling reserve should be put on a company, as well as check on the following:


Product Type

Means of Delivery to Customer

Lifetime Membership


Fraud History Checking

Processor Switching

Chargeback History

Credit History




There are several types of risks involved when assessing a high risk merchant account application. However, the most aggravating of these is the contingent liability. As mentioned above, a business that relies on lifetime delivery of product is the most likely to be declined. Unlike risks on fraud or credit, contingent liability increases the possibility of chargebacks in the future. If a merchant is not able to deliver the product or service as promised, customers will want a refund. Generally, the longer the allowance period from the payment to the delivery of the product/service, the higher the risk. Also, if there is little or no proof that it has been deliverd, such as a movie file downloaded online, the higher the risk that is involved.

See the whole article:

Underwriting High Risk Merchant Accounts

More High Risk Merchant Account ezinearticles by Gerri Bryce:

  • OsCommerce for High Risk Merchants - The Good, The Bad, and The Possibilities
    [Finance] Just because osCommerce is the most popular merchant account software doesn't mean it's the best solution for your online business. Agree or disagree? Do you find osCommerce to be overrated? A lot of high risk merchants adopt osCommerce as their primary merchant account solution because of so many advantages.

  • Insider Tricks to Successful High Risk Merchant Account Application
    [Finance] Many merchants complain about the lack of information when it comes to high risk merchant account application. It's not that there's no information at hand; it's more likely because merchant account providers do not give standard customer service or are simply too lazy to share the nuts and bolts that the applicants need.

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