How to reduce the risks associated with high-risk merchant accounts

How to reduce the risks associated with high-risk merchant accounts ?

A high risk merchant account is an account that is used by businesses that are considered to be high risk by banks and other financial institutions. These businesses may be in industries that are prone to fraud, or they may have poor credit histories. High risk merchant accounts typically have higher fees and interest rates than regular merchant accounts.

There is no definitive list of high-risk businesses, but some examples include:

– Startups

– Small businesses

– Businesses with limited operating history

– Businesses with high levels of debt

– Businesses in industries with high levels of regulation

– Businesses with high levels of customer churn

– Businesses with narrow profit margins

High-risk merchant accounts are is a business or industry that requires special processing services due to its nature.

Chargebacks represent a significant risk for high-risk merchants. Chargebacks occur when a customer disputes a credit card transaction and the credit card company refunds their money, usually because they did not receive what they paid for or the product was not as advertised.

Online gambling sites, online dating services, online pharmacies, and other businesses where clients are more likely to dispute credit card charges are high-risk merchants.

If you run a high-risk business or work in a sector that requires specialized processing services owing to its nature (for example, healthcare), you may want to explore accepting Bitcoin instead of typical payment methods like Visa or Mastercard from your clients.

The term “high-risk merchant” refers to the category codes that are considered by financial institutions to be the most financially unstable. These codes typically generate the highest levels of cardholder disputes and represent higher levels of financial risk to banks and/or create additional brand risk for regulatory reasons.

High-risk merchant category codes are the industries that predominantly generate the highest levels of cardholder disputes, represent higher levels of financial risk to the banks and/or create additional brand risk for regulatory reasons.

A high-risk industry is one that entities such as financial institutions and payment processors typically consider financially unstable. This instability is usually due to factors such as high chargeback rates, high ticket volumes, and products and services of dubious legality.

Historically, the most common examples of high-risk industries were gambling, telemarketing, and adult entertainment. However, as technology has advanced and the number of merchants accepting cards has grown exponentially over time, a new generation of merchants has emerged with more diverse offerings—from pharmaceuticals to travel agencies—that have also proven to be financially unstable.

The risk is related to the type of customer you intend to target. If your clients have a history of making late payments or defaulting on their credit cards, they are more likely to do so again. Furthermore, if the majority of your clients make purchases over the phone or online using their credit cards rather than cash, it may be more difficult for them to trace what they spent and when they spent it. This implies that there may be more fraudulent conduct in these types of businesses than in others.

The risk is related to the type of transaction you are carrying out. Customers will have a more difficult time keeping track of what they spent and when they spent it if their transactions are conducted over the phone or online using credit cards rather than cash. This may result in more fraudulent conduct in these types of firms than in others. The danger is related to your company’s location. If your business is in an area with a high level of crime and theft, this can be a problem.

Here’s what takes place if a chargeback occurs:

A chargeback occurs when a customer disputes a charge with their bank or credit card company. This is a common occurrence and can happen for any number of reasons, but most often it happens because the customer doesn’t recognize the charge on their statement, or there was an error made by the merchant.This can happen for a number of reasons, from the customer simply not recognizing the charge to fraud.

If a chargeback occurs, the merchant will be notified by the credit card issuer and will have to provide documentation to prove that the transaction was legitimate. If the merchant is unable to prove that the transaction was legitimate, the chargeback will be processed and the funds will be returned to the cardholder.The merchant is responsible for paying the chargeback fee in the event of a chargeback. Depending on the card type and level of risk connected with your organization, this might range from $15 to $100 for each transaction.

Furthermore, if you have a high-risk merchant account, your chances of incurring these costs grow. This means that you will no longer receive the money from your customer. If the transaction was processed through a credit card, it may also affect your ability to accept credit cards in the future.

How to reduce the risks associated with high-risk merchant accounts

When you manage a high-risk firm, you must ensure that your accounts are secure. There are numerous steps you may take to mitigate the risks connected with high-risk merchant accounts:

Know the rules

The first thing you need to know is that there are rules in place for just about every aspect of your business.

You’ll need to understand the rules of your payment provider, your bank, and even your industry. If you don’t abide by these rules, you risk losing access to a high-risk merchant account. In this case, knowing the rules means understanding what can cause banks and payment gateways to remove their services from you.

  • Monitor your account activity. Monitor your account activity closely and report any suspicious activity to your provider immediately.A good merchant services provider will offer a variety of tools to help you monitor your accounts. You should have access to an online dashboard that allows you to see all of the charges on your account at any given time. This way, if something looks suspicious or fraudulent, it’s easy for you to spot right away by accessing this information in real time (or near-real time).
  • Regularly review and manage your accounts. This includes monitoring all transactions to ensure that everything is being used for its intended purpose, as well as keeping note of any changes or unusual behavior in or around your account.Keep your account in good standing. Make sure to keep your account in good standing by making all required payments on time and maintaining a good credit history.You can also monitor your account to look for chargebacks, payment reversals, and other types of high-risk activity.
  • If someone reports an account as fraudulent or unauthorized charges are found on one of your cards, contact the bank right away so they can investigate further and potentially freeze any funds associated with this charge until it’s resolved (this will prevent more money from being stolen).
  • Choose a reputable provider. Make sure to do your research and choose a reputable provider with a good reputation in the industry.Know the rules and regulations. You’ll need to know what rules apply to your industry and how they affect you as a merchant. This can include restrictions on who can use credit cards for payments, limits on how much money it takes before an account is considered high risk, and other factors that may make accepting plastic problematic for certain businesses.
  • Read the terms and conditions carefully. Be sure to read the terms and conditions of your account carefully so that you are aware of all the fees and charges that may apply.
  • Reduce the risk of fraudulent chargebacks by ensuring that all products are delivered as ordered within 30 days of purchase; if customers are dissatisfied with their purchase within this time frame, they should contact customer service immediately so refunds can be issued without hassle either end!

Limit customer data

  • Do not store customer data.
  • Do not use customer data for any purpose other than the transaction itself (and even then, only as much as is necessary).
  • Do not send marketing emails or other communications to customers based on their previous interactions with your business.

Do not sell customer data or transfer it to another party. Do not use customer data for purposes other than those related to the transaction itself (and even then, only as much as is necessary).Limit customer data collection whenever possible—don’t keep records of sensitive information like social security numbers or birthdates if they’re not necessary (and don’t store them online either!). Also keep track of who has access to sensitive information like this so if there’s ever a breach by someone inside your organization, everything gets deleted quickly; otherwise all those personal details might get stolen too!

Have a plan for when things go wrong.

If you’re in a high-risk business, it’s important to have a plan for when things go wrong. With that said, you need to make sure that your plan is well documented and thoroughly tested. You also want to make sure that the people who need this information have access to it.


You can reduce your risk as a high-risk merchant by knowing the rules and monitoring accounts, limiting customer data and having a plan for when things go wrong. If you’re in a high-risk business, there are steps you can take to reduce the risks. By taking precautions to avoid chargebacks in the first place (such as routinely checking transactions), you’ll be able to keep your account robust while still reaping the benefits of accepting credit cards or checks as payment methods.

If your business has experienced a chargeback, we will reach out to you immediately and work with you to understand what happened and how to prevent future occurrences. If the chargeback occurred due to an error on the part of our platform, we will work with you to fix it promptly and ensure that future transactions go through without a hitch.

For more information Contact PayPound at +44 800 832 1733 or email us at and join hands with us NOW! Follow us on LinkedIn!

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