How To Get Approved For A High-Risk Merchant Account

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Today, there are more digital payments than they were ever before, and as commerce gradually moves to cyberspace, there is a growing need for businesses to process payments online. However, finding a cost-effective payment processing solution is easier said than done. Still, it is essential as only 19% of consumers prefer to use cash over their debit or credit card for most transactions.

While a low-risk merchant account is less expensive, it is also harder to qualify for. Even though the majority of payment processors serve various industries, there are often some businesses that these mainstream processors won’t serve. 

These high-risk merchants often don’t receive an immediate welcome from most payment processors due to the risk associated with their business. These industries are often at a higher risk of chargebacks and fraud in general so most low-risk merchants will not accept them. 

If your business falls into the “high-risk” category, you may struggle to find the right payment processor. But who determines if a company is high-risk? And what factors determine the risk? In this article, we’ll help you understand all this and more, so you can be better prepared to find the right payment processing partner for your business needs.

What Does A High-Risk Merchant Account Do?

Now, if your business is labelled as high-risk, then you will need a high-risk merchant account because most, if not all, mainstream payment processors don’t want to engage a business within your industry. A high-risk merchant, as mentioned earlier, is at a higher risk of fraud, chargebacks, and often lots of returns.

Other reasons making your business high-risk include that you are a new merchant with no history in the industry. However, you can also be classified as a high-risk merchant if you sell high-risk items (list in the next section). Usually, high-risk merchant accounts also have a higher processing fee, mainly to make up for added risk taken by the payment processor.

Higher Fees Associated With High Risk Merchant Accounts  

Before signing up for a high-risk merchant account, remember that high-risk payment processing is a bit more costly than accounts outside of a high-risk industry. The processing fees associated with these accounts will be generally higher for all transactions, sometimes even double the rate of an otherwise low-risk account.

Even though low-risk merchant accounts are responsible for paying a chargeback fee, if there is one, the higher-risk merchants need to pay a higher fee. This fee is then transferred to the high-risk business. 

High-risk merchants may also be locked into a long-term contract, with an early termination fee, annual or monthly fee. In addition, the accounts for high-risk merchants may be subject to a rolling reserve, wherein the payment processor will hold a certain percentage of your income until the transactions can be verified as not being fraudulent or perhaps the risk of a chargeback.

How Can A Merchant Be Considered High Risk?

What makes a merchant high-risk? How do payment processors define a high-risk merchant? While we went over a few reasons above, other causes are more nuanced. Every high-risk merchant services have their own criteria for what they deem a high-risk merchant account. Generally, below is what you can expect:

A high transaction volume – Many payment processors will consider a merchant high risk if there is lots of transaction volume or they have a higher than the average transactional rate. For instance, if a merchant processes over $20k per month or the average transaction is $500, they could be considered high risk.

Accepting payments internationally – A merchant selling to international customers, which includes otherwise high-risk countries with a higher likelihood of fraud, may be considered a high-risk merchant. High-risk countries are ones other than the US, Australia, Canada, and the UK, in addition to European countries in general.

New seller – If there is no history of processing payments or has a minimal history of processing transactions, they are considered high risk. Some merchants may have to start out with high-risk accounts. 

Working in a high-risk industry – Even though you may have a spotless record as a merchant, your business can still be labeled high-risk because of the industry you’re working in. For instance, subscription-based businesses are referred to as high risk because people may sign up for a trial but forget to cancel the payment. Then when they see the charge on their statement, they will demand a chargeback. Credit card processing and chargebacks cost a lot of money, and thus the burden is passed on to the merchant.

Poor credit score – If a merchant’s credit score isn’t good, they could be deemed high risk.

High-Risk Businesses

It is worth knowing what businesses and industries are considered a high risk before getting into them. Below is a brief list of these businesses:

·      Gambling/casino

·      Electronics

·      Furniture

·      Cruises, airlines, and vacations

·      E-cigarettes (Vape) and CBD

·      MLM

·      Adult industries

·      eCommerce

·      Debt collection

·      Online dating

·      Cannabis

How Does Approval Work?

If you have established that only a high-risk merchant account will work, you need to get approved for an account. This will require submitting your tax documents, identification, business registration, etc., for approval.

Payment processors will then assess if your business and industry are what they cater to. Remember that all high-risk payment processors may not accept you, because they don’t cater to all high-risk industries but most will.

You should also read the contract before choosing a high-risk payment processor. Since every platform and payment processor differs, knowing what terms they offer is imperative.


You might have gathered by now that some businesses have inherent risks associated with them. Though how “high risk” is defined varies, you will want to find one that works best for you. This will often mean going through and contacting various high-risk payment processors.

In the meantime, if you need assistance with securing a high-risk payment processing account, contact the FLEX Payment Solutions team for a complimentary consultation today at (844) 353-9768 or [email protected].

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