High Risk Merchant Accounts : Features and Benefits


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?

The term “high-risk merchant account” is somewhat confusing. In this article, we’ll explain what it means and give you the information you need to make an informed choice about which type of merchant account is right for your business.

When most people hear the phrase “high-risk merchant account,” they think of a high-interest loan or a credit card with high-interest rates. However, this isn’t what it means here at all! A high-risk merchant account refers to a type of payment processing system that’s used by companies with higher than average fraud rates or chargeback history (i.e., those whose customers often dispute charges).

Why are some accounts considered high risk?

High-risk merchants are those that sell products or services that some people may consider objectionable for one reason or another.

Some high-risk merchants sell items not permitted by law in certain markets. These could include products like alcohol, tobacco, weapons, fireworks, drugs, and more. (Note: We are not lawyers, so please consult your own counsel when considering selling these types of products.) 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may be declined because they don’t provide enough security for users’ information through SSL encryption or use outdated software that leaves them vulnerable to malware attacks on their sites (yes—even eCommerce sites!).

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.

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

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.
  • 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 are often able to 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).

More options for payment types – High-risk accounts are often able to 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 that more customers will be able to purchase your products without worrying about getting declined due to insufficient funds in their checking/savings account.

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?

To find the best high-risk merchant account provider, you should compare rates and fees. You also need to 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 provide assistance?

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 that is used by most banks when they decide whether or not 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. It takes time to find the best option for your business, but it’s worth it.

Finding the right account for your business is a process that requires patience and thoroughness. It can take time to find an account that fits your needs, 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 important 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 definitely be worth it!


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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