Merchant account is a contract between a business and a bank or a financial institution. This contract ensures that the bank accepts payments for the products or services on behalf of the business. These Merchant acquiring banks ensures that a merchant or company can accept payment from international customers for the products or services they deliver. Thus high risk merchant services form a vital part of any E-commerce business.

There are two types of merchant accounts. First is the normal account, where the merchant can directly access the card and ensure that it is a legitimate customer, thereby the risk involved is minimal. The second type of merchant account involves the accounts where it is not possible to visually testify the customer. These types of accounts include adult entertainment merchants, online tobacco merchants, replica merchants, online gambling merchants, pre-paid calling merchants, VOIP merchants, multilevel marketing merchants, or any transaction that takes place with the customer physically not present. Thereby, the possibility of fraud activity is much greater with this type of business which results in classifying these types of accounts as "high risk" ones. Naturally, these high risk merchant accounts present the risk of the dreaded charge backs for the banks in question. It has been proved by various researches that these high risk processing transactions are more susceptible to fraudulent transactions.

These factors considerably reduce the number of banks willing to take up these high risk processing accounts. These adversely affect the applying company in setting up payment processing accounts. They often come across a situation where the banks generally decline their application, or impose high restrictions on the account transactions which virtually makes it impossible to conduct normal business. Even if a merchant has established a payment processing account with a bank, he can never be sure that the relationship with the bank is secure. The bank might revise their underwriting criteria anytime, and suddenly merchants are facing a situation where the payment processes adversely affect their business.

Today, many top-notch banks are ready to establish high risk merchant accounts. These accounts are highly personalized accounts. The banks study the system intensively and then draw conclusions on the rates of transaction that should be imposed. High risk merchant acquiring banks take into account the technique the company uses to draw customers, the expected turn over and the types of customers that might get involved with them. These banks also encourages merchants to open up multiple accounts thereby ensuring a diversified payment process, and even if one account encounters an issue, business can proceed through the other active ones.

As the saying goes, you cannot achieve anything in life without taking risks; companies are on the look-out for novel grounds that ensures a healthy business. These ventures might be a little unconventional, but what counts in the end is the turnover the company produces. So, banks or financial institutions should study them carefully and try to help them carry out the payment process, rather than classifying them as high risk and denying applications. The high risk merchant account acquiring banks are in fact eye-openers in this regard.