High-Risk Merchant Accounts: Features and Benefits

How do you define a high-risk merchant account?

A high-risk merchant account is defined as a merchant account that is associated with a business that is considered to be high risk by the credit card processing company. This can be due to several factors, including the type of business, the industry the business is in, the average transaction amount, and the number of chargebacks the business has. A high-risk merchant account deals with a business with a history of credit issues, chargebacks, or fraud. This can include companies like online gambling sites or adult entertainment sites.

These merchants have trouble finding banks to work with them because they’re considered at higher risk than other businesses. They also tend to have more unique payment processing needs, so it’s best if they find a bank that specializes in providing high-risk merchant accounts.

If you have a business that charges its customers by credit card, there’s a good chance that you’ve heard the term “high-risk merchant account” at some point. You may have even been tempted to run away from the idea of getting one for your business. But before you do, consider this: High-risk payment processing can be an excellent way for many companies to lower their costs and improve their cash flow.

What is a High-Risk Merchant Account?

A high-risk merchant account has a higher risk of chargeback or fraud than other accounts. High-risk accounts are usually given to businesses with higher sales and purchases, such as e-commerce websites.

Merchants who accept credit cards risk fraudulent charges or card payments not authorized by the cardholder. Some merchants have a greater risk of fraud than others, making them high-risk merchants. A high-risk merchant account refers to a payment processing system used by companies with higher than average fraud rates or chargeback history (i.e., those whose customers often dispute charges).

A high-risk merchant account is a type of credit card processing service that is designed for businesses that accept payments from customers who are known to be more likely to default on payments. This can include companies in the travel and hospitality industries and those selling products or services with higher price points.

High-risk merchant accounts are often more expensive than standard merchant accounts because they require a higher rate of fraud protection, which means that the credit card processor must be willing to take on more risk when offering this type of account.

Why are some accounts considered high risk?

Businesses that are considered high risk in payment processing include those that sell products that are easily counterfeited or stolen, such as electronics and luxury goods. These businesses also sell their products online, making it more difficult to track the source of the payment and thus verify the legitimacy of the transaction.

The other type of business deemed high risk sells a product that is highly regulated by law, such as alcohol or tobacco.

There are a couple of reasons why some businesses are considered high risk in payment processing.

First, the nature of their business may be a problem. For example, if they sell alcohol or tobacco products to minors, they’re more likely to be shut down by authorities than other businesses that sell similar products.

Second, the size of their business can make them more likely to get shut down. If you’re running a small mom-and-pop store and the government wants to go after you for something, it’s probably not worth their time and effort because there’s not much money for them. But suppose you’re running a large chain store with many locations in multiple states. In that case, it makes sense for them to put some effort into shutting your business down—especially since there’s potential for significant monetary reward.

Finally, if you’ve been caught selling anything illegal (like drugs) or engaging in fraud (like identity theft), chances are pretty good that someone will come after you eventually—and they may have enough information about your business to know when they should do so.

The merchant account provider will evaluate the nature of your business and its customers to determine whether you’re a good fit for their network—and if you aren’t—they’ll let you know where else you can go to find a better solution.

Other high-risk merchant accounts may be declined because they don’t provide enough security for users’ information through SSL encryption or use outdated software that leaves them vulnerable to malware attacks on their sites (yes—even eCommerce sites!).For example, if a business has a lot of transactions but very few customers, it might be considered high risk. This is because there is a greater chance that the transactions are fake and used to hide fraudulent activity from other businesses.

No matter what type of services or goods you offer, there’s a high-risk merchant account that can help your business grow and thrive. While some providers will only work with specific types of companies (like sports betting), others have more flexible requirements for these sorts of accounts.

How can high-risk businesses get approved for a merchant account?

One of the best ways to get approved for a merchant account is to provide the information your prospective processor needs to make an informed decision.

This can include your business’s annual revenue, average customer transaction size, and average ticket price. You should also be prepared to answer questions about handling returns, refunds, and chargebacks.

Here are five tips to help you get past the red tape and start accepting payments from customers in no time:

  1. Be honest about your risk factors.
  2. Be prepared to show you have the money to pay any chargebacks or refunds.
  3. Ensure your business is stable and has been operating for at least six months.
  4. Make sure you have a solid plan for using the money from your online sales (don’t just blow it all on gold coins and trips to space).
  5. If you’re still having trouble getting approved, talk to someone at Paypound! We’ll do everything we can to get your merchant account approved so you can sell goods online like everyone else!

When it comes to high-risk businesses like yours, it may be helpful to have a credit card processor with years of experience in processing payments for businesses like yours. This will give them a better understanding of what’s typical for these types of businesses and allow them to make more accurate decisions on whether or not they should approve your application.

What are some of the benefits of high-risk credit card processing?

Having a merchant account with a high-risk payment services provider is one of the best ways to accept online payments. High-risk merchant accounts are available to any business, and they offer many benefits that you won’t get with conventional processing solutions.

Low Risk of Fraud And Chargebacks

This is probably the best-known benefit of high-risk credit card processing, and it’s essential for businesses selling products in industries prone to fraud. Because they’re higher risk, merchants who process with a high-risk processor are charged more for their merchant accounts than lower-risk ones. This means they have to charge more for their products and services to make up for the extra costs—which makes it harder for them to compete on price without taking on even more risk by undercutting their competitors’ prices.

One of the main benefits of high-risk merchant accounts is that they reduce your risk of fraud and chargebacks compared to standard processing methods. With traditional payment methods, scammers can create fake websites or phishing emails and trick unwitting customers into sending their personal information or making an unauthorized payment. These fraudulent transactions can lead to costly disputes that cost you time and money (plus all those late-night phone calls from angry customers).

But if you use a service like ours that operates at high-risk levels—meaning we’re not afraid of taking on “riskier” businesses—you’ll be protected from these types of attacks because we have sophisticated security systems designed specifically for this industry which monitor activity 24/7 around the clock looking for unusual activity!

High-Risk Merchant Accounts Are Available To Any Business

The second benefit is that high-risk merchant accounts are available to any business. The application process for a high-risk merchant account is straightforward and fast, so even if you don’t have the best credit score or want to start a new business without having your own credit history, you can still get approved for a high-risk credit card processing account.

High-risk credit card processing can be an attractive option for merchants looking to improve their bottom line. Some of the benefits include:

  • Higher interchange rates – High-risk merchant accounts have a higher interchange rate than standard merchant accounts, which means you pay less in fees on every transaction. A merchant’s interchange fee, or the transaction fee that you must pay to a bank or credit card processor to accept payments with a credit card, is set by Visa and Mastercard. The two companies negotiate with large banks on behalf of all merchants concerning the interchange rates, which vary depending on your business size and location.
  • Lower transaction fees – The lower rate is offset by higher risk for the card issuer, so they pass some of this cost on to you in the form of a flat fee or percentage charge that varies by processor and industry but is typically much smaller than what you would pay if you were processing standard cards.
  • High-risk merchants can often extend payment periods beyond 30 days and offer other options such as net 30, or even net 60, depending on how well they’ve maintained their account with their processor. This can help reduce cash flow concerns while giving customers more time to pay off small purchases that might otherwise go unpaid due to insufficient funds (NSF).

A Reputable Payment Processor Takes Care Of All The Heavy Lifting

When you’re a high-risk merchant, you can’t be expected to take on the extra burden of managing all the paperwork and reporting involved in processing credit cards. The payment processors that cater to high-risk merchants have you covered: they do all of it for you. All of your concerns about chargebacks and fraud protection are taken care of by the payment processor. You don’t need to worry about anything but growing your business!

More options for payment types – High-risk accounts can often accept payments via check, wire transfer, ACH (automated clearing house), and other methods that may be more convenient than using credit cards or cash. These additional methods can help increase sales by allowing customers without a checking account or debit card access to your products without having their order rejected due to insufficient funds in either type of account.

More options for funding- High-risk processing is typically available through multiple channels, including direct bank accounts and alternative payment systems like PayPal or Venmo. These services are often associated with lower fees than traditional processors because they don’t have to worry about the higher costs of maintaining relationships with banks and other financial institutions. The ability to process these transactions means more customers can purchase your products without worrying about getting declined due to insufficient funds in their checking/savings accounts.

What are some of the disadvantages of high-risk payment processing?

As with any decision, there are disadvantages to high-risk processing as well. These include:

  • You may not be able to use certain card types, such as virtual or pre-paid cards (or even Visa-branded cards). Some processors will allow you to accept these types of cards, but only if the customer first faxes them a copy of their ID and then calls the processor afterwards. This can add an additional administrative burden on both you and your customers while still being inconvenient for them.
  • You could potentially pay higher fees than other merchants because of the increased risk involved in working with your business type. However, some processors will charge lower rates when compared to more mainstream businesses like hotels or restaurants, because they don’t have as much experience working with them (which is good news if your business falls into this category).
  • You may not be able to use certain payment methods due to regulatory requirements imposed by specific countries/jurisdictions where they operate at scale, like Scandinavia, which has very strict rules about how companies can interact with consumers online (such as requiring all forms submitted over HTTPS).

How can I compare high-risk merchant account providers to get the best deal?

You should compare rates and fees to find the best high-risk merchant account, and provider. You must also consider other costs associated with working with a specific provider, such as monthly minimums or setup fees.

Once you have looked at these details, you should consider how well the provider can help your business in terms of technology and compliance. If you run into any problems with your account, does the provider offer customer support? How quickly will they respond? Will they be able to help with any challenges that arise in your business? Lastly, look carefully at how reputable the company is in its industry.

When you’ve narrowed it down to a few providers, you’ll want to ask them these questions: How will they help me with my business? Do they have experience in working in my type of industry? What is their customer support like? If problems arise, does the provider assist?

How is my business categorized as high risk?

If your business is considered high risk, it’s because of a combination of the following factors:

  • Business size
  • Industry
  • Location
  • Credit history
  • Transaction volume (amount transacted)
  • Reputation, both with the company and among consumers. This includes a reputation for fraud and chargebacks, customer service issues, etc.

These are all things that can be assessed as part of the risk assessment process used by most banks when deciding whether to approve an account application.

When you are approved for a high-risk merchant account and have a payment gateway set up, the payments will be processed through this gateway instead of directly from your website. This means that if anything goes wrong with the transaction, then it will not impact your business finances or reputation.

Be patient and thorough. Finding the best option for your business takes time, but it’s worth it.

Finding the correct account for your business is a process that requires patience and thoroughness. Finding an account that fits your needs can take time, but it’s worth it to do the work necessary to get what’s best for your business.

Here are some ways you can be patient and thorough while searching for an appropriate high-risk merchant account:

Be patient: Once you’ve found the right account for your business, it’s essential to be patient and thorough. The process may take some time if you’re looking for a credit card processing service that offers all of these aspects in one place—but it’ll be worth it!


In the end, high-risk merchant accounts afford all types of businesses the ability to accept credit card payments. While some might be concerned about certain downsides like higher fees or fewer options than other payment processing companies, these are outweighed by the many benefits of high-risk merchant accounts, including low risk of fraud and chargebacks and competitive interchange pricing.

We hope this article has helped you understand what a high-risk merchant account is and why they are important. We also covered some of the benefits and disadvantages of these accounts so you know what to expect before signing up with one. Remember that there is no one-size-fits-all solution, so be patient and thorough in your search for the right provider—it might take some time, but it’s worth it!

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