High-risk merchant account fees are more costly than traditional merchant accounts to offset the financial exposure associated with servicing high-risk businesses. A business is classified as high-risk because of the potential for chargebacks, fraud, and other risks.
Without a merchant account, your business cannot accept credit or debit cards — the consumers’ most preferred means of payment. You need a high risk merchant account to access the level of payment processing support necessary for your operations.
Average High-Risk Merchant Account Rates
High-risk merchant account rates vary depending on:
- The processor
- Your business’s risk level
- Business’s industry
- Transaction volume
The average high-risk merchant account rates range from 2.5% to 10% per transaction. Some payment processors may also charge a monthly fee for high-risk merchant accounts ranging from $10 to $50.
The high risk merchant account cater for your business’ high risk of chargebacks, fraud, or other payment processing pitfall that makes it difficult to secure a traditional merchant account. The payment processor assumes more risk when working with high-risk merchants, so they charge more for their services.
Besides the transaction rates, high-risk merchants can expect to pay various fees associated with their merchant accounts, such as:
- Application fees
- Monthly fees
- Chargeback fees
- Reserve fees.
These fees can vary depending on the processor, the merchant’s risk level, and other factors.
5 Fees That Fluctuate With Your Risk Level
Several fees associated with a high-risk merchant account can fluctuate based on the merchant’s risk level. These fees include:
- Application Fee: Some high-risk payment processors charge an application fee when you apply for a merchant account. The application fee can vary based on your risk level.
- Monthly Fee: The monthly fee for a high-risk merchant account can also fluctuate based on your risk level. The higher the risk, the higher the monthly fee.
- Chargeback Fee: The chargeback fee is a fee charged when a customer disputes a charge. The fee can vary based on the processor and the merchant’s risk level. Chargebacks can be expensive for your business because you lose the sale and incur fees from the payment processor.
- Reserve Fee: A reserve fee is a fee charged by the processor to hold a portion of the merchant’s funds in reserve for some time to protect the processor from increased financial exposure with servicing high-risk business. The amount of the reserve fee can vary based on the merchant’s risk level.
- Transaction fees: A transaction fee is a percentage of each sale that goes to the processor as a service fee. The rate fluctuates depending on your business’s risk levels. The higher your business’s risk, the higher the rates you’ll incur.
5 Static Fees Regardless of Your Risk Level
Some fees associated with a high-risk merchant account remain the same regardless of the merchant’s risk level. These fees include:
- Refund Fee: When a buyer requests a refund, your business might be subject to extra charges from your processor. You should factor this cost into your pricing strategy to ensure you can provide refunds without falling into the red. Your business should also formulate refund policies so customers should know what to expect when requesting one.
- Statement Fee: The statement fee is a monthly fee charged for providing the merchant with a statement of their transactions, and it’s static regardless of your risk level.
- PCI Compliance Fee: The PCI compliance fee is a requirement for every business accepting credit card payments. The fees ensure that the merchant complies with the Payment Card Industry Data Security Standards. A business can incur PCI non-compliance fee if it fails to meet the PCI standards. Some processors will charge compliance fees to pass down compliance maintenance costs.
- Gateway Fee: The gateway fee is charged for using a payment getaway — the technology that connects the payment processor to your website or software. This fee is typically the same for all businesses, regardless of the risk level.
- Termination Fees: Processors may charge an early termination fee for costs associated with concluding the contract. The charges also compensate the processor losses stemming from the early termination of the merchant agreement. Termination fees are almost the same for all businesses regardless of risk level, size, or industry.
Your Business Deserves a High-Risk Merchant Account at the Best Rate
In today’s digital age, all businesses should accept credit and debit card payments. While high-risk merchant accounts may come with higher fees compared to traditional merchant accounts, the benefits of accepting card payments are invaluable. Your business can:
- Increase their revenue
- Reach a wider audience by accepting the most common payments options
- Get additional features such as fraud detection and chargeback prevention tools to protect your business
Your business needs a payment processor that understands your unique needs and can provide you with the best rates and fees possible. At FLEX Payment Solutions, we can help you navigate the process of obtaining a high-risk merchant account at the best rate possible. Contact FLEX today for more information.
