A High Risk Merchant Account At HighRiskPay.com is a type of payment processing account that allows businesses in certain industries to accept credit and debit card payments. These merchant accounts are considered “high-risk” because they work with businesses more likely to be targeted by fraud and chargebacks.
High-risk merchant accounts are necessary for many online and brick-and-mortar businesses whose industries are deemed risky by banks and credit card processors. Some common high-risk industries include:
CBD and hemp products
Supplements and nutraceuticals
Money services and cryptocurrency
Travel and ticketing
Because these business types tend to have higher transaction costs and more potential for illegal activity, most traditional merchant account providers won’t work with them. High-risk merchant accounts allow these legitimate but high-risk businesses to accept payments and operate effectively and securely.
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What Is A High Risk Merchant Account At HighRiskPay.com?
A high-risk merchant account is a type of business bank account set up by a payment processor that allows merchants in certain industries to accept credit and debit card payments (https://www.nerdwallet.com/article/small-business/high-risk-merchant-account). It is designed for businesses deemed “high-risk” that traditional banks may deem too risky to take on.
High-risk merchant accounts differ from standard merchant accounts in a few key ways:
Higher fees – High-risk accounts have higher processing fees, account fees, and chargeback fees.
Stricter application process – More documentation and scrutiny is required during underwriting.
Higher holdbacks – A larger percentage of funds may be held in reserve in case of disputes or chargebacks.
Closer monitoring – High-risk accounts are monitored more closely for suspicious activity.
The “high-risk” designation is due to a perceived higher chance of fraudulent transactions and chargebacks in certain industries. Payment processors take on more risk by approving these accounts and, therefore, charge higher fees and rates.
Types of High Risk Merchant Account At HighRiskPay.com
Businesses considered high-risk fall into several major categories. Some of the most common industries considered high-risk include:
Many online merchants selling certain types of products are classified as high risk due to the potential for customer disputes and chargebacks. Common high-risk ecommerce categories include:
CBD and hemp products
Multi-level marketing products
Crypto and Blockchain
Cryptocurrency merchants and companies involved in blockchain technology also tend to be categorized as high risk given the volatility and newness of the industry.
Other High-Risk Industries
Other business types frequently deemed high risk include:
Legal online gambling
As you can see, high-risk merchant accounts span many different industries that traditional processors consider risky to take on.
Fees and Rates
High-risk merchant accounts come with higher fees compared to standard merchant accounts. High-risk businesses tend to have higher rates of chargebacks and fraudulent transactions, making them costlier for banks and processors to service. Some key fees to be aware of include:
Higher Processing Fees
Processing rates for high-risk merchants typically range from 2% to 12% per transaction, compared to low-risk businesses that may pay between 0.5% to 3%. Rates are based on your business type and risk level.
You’ll also have recurring monthly fees ranging from $20 to $200+ to maintain your account. This covers costs like monitoring for suspicious activity, PCI compliance, account maintenance, etc.
Early Termination Fees
If you close your account early, a termination fee is usually charged, often $295 or more. Make sure to review the full contract terms.
Most high-risk merchant accounts use an interchange-plus pricing model, including interchange fees set by the card networks and a markup assessed by the provider.
Getting approved for a high-risk merchant account can be challenging due to the intensive underwriting process. Providers must verify their business operations and assess risk before approving an account.
The approval process typically involves providing the following documents:
Articles of incorporation
Personal identification (owner’s SSN, driver’s license)
6 months of bank statements
Past processing statements (if applicable)
With these documents, providers will assess factors like:
Time in business
Business and personal credit scores
Projected sales volume
As noted here, traditional approval for a high-risk account can take 3-5 days at a minimum due to this extensive underwriting process. Having complete documentation and a track record showing your business is at lower risk can help improve approval chances.
Choosing a Provider
When selecting a high-risk merchant account provider, there are a few key factors to look for:
Expertise in your industry
Make sure to choose a provider that specializes in your specific high-risk vertical. An experienced provider that caters to your niche will understand the unique challenges and requirements (source).
Reviews and complaints
Carefully research potential providers and check third-party review sites to gauge customer satisfaction. Providers with a high volume of complaints should raise red flags.
Tools, services, and support
Look for providers that offer value-added services like chargeback management tools, dedicated account management, and merchant support. Having access to resources that help mitigate risk is essential.
Top Providers for High Risk Merchant Account At HighRiskPay.com
Some of the top high-risk merchant account providers are PaymentCloud, Host Merchant Services, Payline Data, National Processing, and Durango Merchant Services:
PaymentCloud: PaymentCloud is known for its innovative technology and excellent customer support. It suits new businesses and businesses with past chargebacks or payment issues.
Host Merchant Services: Host Merchant Services offers high-risk merchant accounts tailored to each industry. It provides useful, in-house compliance, risk, and account management support.
Payline Data: Payline Data has extensive experience in payment processing for high-risk industries. It works with unqualified businesses and provides competitive rates with no monthly minimum fees.
National Processing: National Processing has over 28 years of experience in processing payments for high-risk industries. It offers a white-label program for resellers, ISOs, and agents.
Durango Merchant Services: Durango Merchant Services specializes in CBD and other high-risk industries. It is known for fast funding times, excellent tech support, and no hidden fees.
Improving Approval Chances
Several factors can improve your chances of getting approved for a high-risk merchant account:
Length of Time in Business
Merchant account providers generally prefer working with established businesses that have been around for several years. According to Nerdwallet, you’ll have better luck getting approved if your business has been operating for at least 2 years.
Higher sales indicate a healthy, thriving business, making you less of a risk in the eyes of account providers. While requirements vary, you’ll typically need to process at least $10,000 monthly to qualify.
Keeping your chargeback rate below 1% improves your chances of getting approved. Chargebacks occur when customers dispute transactions, and a high rate signals potential fraud issues.
Other things that can help include having a clean credit history, low return rates, compliant refund policies, and a strong business plan. Volume projections, cash flow statements, and evidence of business growth may also strengthen applications.
Alternatives of High Risk Merchant Account At HighRiskPay.com
If your business is having difficulty getting approved for a high-risk merchant account, there are some alternative payment solutions to consider:
Payment Processors or Aggregators
Some payment processors like PaymentCloud specialize in serving high-risk merchants. They work with multiple acquiring banks and can help get you approved even if you’ve been turned down. The downside is rates may be higher.
Opening a merchant account in another country with less strict regulations is an option. However, there are risks with going offshore, so do your research. Many offshore providers have poor reputations for customer service and sudden account freezes or closures.
Accepting cryptocurrency like Bitcoin allows high-risk businesses to bypass the credit card system entirely. It’s a newer option still gaining adoption. Make sure you understand the volatility risks with crypto payments.
Obtaining a high-risk merchant account is crucial for certain business types to be able to accept credit card payments. As we’ve covered, these specialized merchant accounts come with higher fees and rates and more scrutiny during the approval process. Key takeaways include:
Make sure to work with a provider that specializes in your specific industry and can provide the necessary support and service.
Provide exhaustive documentation and details during the application to boost approval chances.
Compare fees and rates between top providers to land the best deal for your processing volume and average ticket size.
High-risk businesses need to partner with the right merchant account provider with specialized vertical expertise. With the right provider, getting a stable and secure high-risk merchant account becomes much more attainable.
I’m a writer, artist, and designer working in the gaming and tech industries. I have held staff and freelance positions at large publications including Digital Trends, Lifehacker, Popular Science Magazine, Electronic Gaming Monthly, IGN, The Xplore Tech, and others, primarily covering gaming criticism, A/V and mobile tech reviews, and data security advocacy.