What is a High-Risk Merchant Account?
Is your startup a high-risk business? Do you worry about getting rejected by banks, card networks, and payment processing service providers? If that is your situation, then worry no more. In this post, we will explain high-risk merchant accounts in detail and list the top providers that will welcome you with open arms. In the end, we hope you will be able to give your business the financial boost it needs to grow. Read on!
What is a High-Risk Merchant Account?
When a bank or payment processor determines that your company account is more likely to have a high volume of returns, chargebacks, or fraud, they classify the account as high-risk. This could be the case for a variety of reasons, such as the fact that you are a new merchant that has never accepted payments before. Another reason could be that your industry is regarded as high-risk and has a high probability of fraud.
Differences Between Low-Risk Merchants and High-Risk Merchants
Every financial service provider has its own standards for classifying merchants as low-risk or high-risk. However, the following are the common indicators used in assessing a business as low-risk, especially in the United Kingdom:
- It provides low-risk products and services, such as books, clothing, household equipment, etc.
- It supports payment in only one currency.
- The business has lasted for many years.
- Its monthly revenue is not more than £15,000 or the same amount of money in Euros or USD.
- Its average transaction by means of credit cards is below £50 or the same amount of money in Euros or USD.
- It has little to no chargeback.
- It prevents fraud by using 3D technology.
On the other hand, a high-risk merchant can be identified using the following indicators:
- The business is quite new and provides high-risk products.
- It has a bad reputation because of the nature of its products.
- It accepts payments in different currencies.
- Its credit rating is poor.
- It is financially unstable.
- It does not have a high credit score.
- It has a high fraud rate.
- It has a high volume of chargebacks.
- Its monthly revenue is more than £15,000 or the same amount of money in Euros or USD.
- Its average transaction by means of credit cards is above £50 or the same amount of money in Euros or USD.
Who Needs a High-Risk Merchant Account? High-Risk Business Examples
Knowing early enough whether your business is high-risk or low-risk is good. It will help you to make appropriate financial and marketing plans and smartly support other functional decision-making areas of your business.
In case you are not sure of where to classify your business, the following are examples of high-risk commercial establishments:
- Online dating sites.
- Online gambling sites, including casinos.
- Adult content producers (sexually oriented or pornographic businesses).
- Debt collectors and credit protection counsellors.
- Forex traders.
- Electronic and furniture stores.
- E-commerce stores (known for excessive chargebacks).
- Travel and vacation planners (known for frequent order cancellations and refunds or chargebacks).
- Multi-level marketers.
- E-cigarette, vape, and CBD shops.
- Companies with recurring payment plans, including subscription services and ISPs (internet service providers).
- Nightclubs and cabaret bars.
- Health and wellness product manufacturers.
- Weapon manufacturers.
- Fantasy sports websites.
- Financial advisory services.
- Sellers of banned or illegal goods.
- Automotive brokers.
- Bankruptcy attorneys.
If you are a high-risk merchant, your merchant account costs will be greater than those of other merchants. So, in order to accept credit card payments on your website, if you operate a business in the industries mentioned above or one that is comparable, you need to get a high-risk merchant account.
How to Choose a High-Risk Merchant Account Provider
Choosing a high-risk merchant account provider is not a simple task. That is because you need to evaluate the available options according to certain factors that will help you make a well-informed choice. Below are the factors to consider.
Industrial expertise
Selecting a provider who is knowledgeable about your sector has several benefits. They will have a better understanding of how normal transactions work and might even be better able to spot fraud before it happens. Besides, those that work in collaboration with other players in the industry render better services. So, try to find out who their partners are and how long they have been in the business.
Customer support
You should look for a service provider that offers reliable customer support. You will likely experience more payment-related problems if you work in a high-risk industry. Therefore, it will be far better to have a live chat option or customer service phone number than to rely on someone to answer emails.
Fee structure and transparency
Consider the fee structure, transparency of pricing and other terms and conditions when choosing a high-risk merchant account provider. While some companies offer modest monthly costs but high transaction volumes, others do the opposite. Therefore, you need to get all the details about the pricing structures (including monthly fees, transaction fees, and discounts) before choosing a high-risk merchant account provider. You also need to ensure that everything in the contract is clear and transparent. For whatever seems unclear, ask that it be clarified.
Gateway service availability
It is highly recommended that you choose a merchant account provider with expertise in accepting online credit card payments for high-risk merchant services. This is necessary because many different sorts of fraud are possible with online payments. Therefore, the service company should probably be able to provide a payment gateway that is more secure and has procedures in place to minimise fraud and chargebacks.
Reliability of security
Your potential payment partner should adhere to strict data security policies and industry standards. To protect your company against unscrupulous users, they should, for instance, have a set of anti-fraud tools and a chargeback prevention system in place. Additionally, firewalls, data encryption, and other common security measures for accepting online payments safely are essential.
Service customisation options
Make sure your merchant account provider can customise rates, goods, services, and features to fit your needs, the state of your company, and your goals. Besides, if you have a complex business model, being able to have a customised payment system will be a necessity for you to succeed in your market.
Website update
A business that is still running smoothly will update its website regularly. So, this factor is important when choosing a high-risk merchant account provider. The entire package—including the current year in the website's footer and basic details about their most recent events—should be kept up to date.
Getting a High-Risk Merchant Account
Documents pertaining to your business and taxes must be submitted when you apply for a merchant account. During the processing of your application, your payment service provider will examine your business and determine whether to classify it as high-risk or low-risk. Its findings will help it adjust the available options accordingly.
It is wise to compare several service providers and choose the one that best meets your company's needs. In this post, we have provided you with a list of some of the top high-risk merchant account providers. Carefully examine the contract as well as terms and conditions before selecting a payment processor because each bank and digital platform for payment processing is unique and has various rules for high-risk merchants.
Best Providers of High-Risk Merchant Accounts
Below are not just some examples of high-risk merchant account providers, but the best in the market. They recognise, understand, and accept high-risk businesses of different kinds, providing them with payment processing services and other innovative tools for growth. You can create an account with any of them you are interested in working with and enjoy their secure, reliable, and rewarding services.
SecurionPay
SecurionPay is a leading all-in-one digital platform that was founded in 2014 to provide global online payment services to businesses of all sizes and different risk levels. The company invests heavily in the creation of a product that future companies will enjoy using. SecurionPay provides the best user experience through an innovative mix of the latest technologies.
The cost of owning an account with SecurionPay is low. The company charges a fee of €0.35 + 4.9% for high-risk merchant account services. There are currently more than 2,500 accounts at SecurionPay, including those that belong to high-risk merchants. These accounts are managed by its team of fintech professionals in its head office in Switzerland.
Dating sites, gaming platforms, travel companies, forex firms, and different types of high-risk merchants can rely on SecurionPay for all their payment processing needs. It enables them to use its API and other developer resources to customise their e-commerce payment systems, support up to 160 different currencies, and provide up to 24 checkout languages. They also do not need to worry about managing fraud and chargebacks because SecurionPay will provide them with anti-fraud and anti-chargeback tools.
Genome
Genome is a fintech company that makes banking better for people through the provision of digital accounts for individuals and businesses, including low-risk and high-risk merchants. It is one of the best financial platforms for fast and secure payments. Many customers enjoy patronising this brand because it offers so many advantages, which include batch payment processing in 40 different methods.
In terms of pricing and costs, you can open a high-risk merchant account with Genome for free. However, you will have to pay several fees, which include a maintenance fee of €100 monthly or €1000 yearly, and a chargeback fee of €30.
Intergiro
If you are looking for a digital payment service that is high-risk-friendly and professionally meets the needs of disruptive businesses, try Intergiro! It is an all-in-one financial super tool for all kinds of forward-thinking businesses.
Intergiro is ideal for modern-day merchants that need to process payments securely and build their banking infrastructure using its API and other innovative products. They can also benefit from its other top-notch features, such as the Intergiro.3d anti-fraud and chargeback minimization systems.
With Intergiro, you do not have to worry about safety. That is because the company complies with several international security and safety standards and holds a licence from the Swedish Financial Supervisory Authority (FSA), which also supervises its operations.
High Risk Pay
High Risk Pay is a US-based service that has more than 25 years of experience in providing payment processing solutions to high-risk merchants. It has a 99% approval rate, which means that you have a very high chance of getting an account if you contact the company today. The company provides integrations for many companies, including WordPress, Shopify, PrestaShop, and Magento.
If your application was rejected somewhere else because you have bad credit, High Risk Pay is willing to accept you. Its variety of accounts includes those for merchants that are into adult content production; debt management; continuity subscription; credit repair; firearm sales; travel service provision; online pharmaceuticals; dating platform hosting; ticket brokering; fintech startup funding; and general e-commerce.
High Risk Pay does not charge any application fee for its services, which include customisable payment gateways, POS terminals, chargeback management, fraud prevention, credit card acceptance, ACH/eCheck processing, and surcharging. Its rates and fees are among the lowest in the market. High-risk merchants pay between 1.79% and 2.95% in rates and $0.25 to $0.50 in transaction fees, depending on the nature of their businesses. Its monthly fee is $9.95 for all customers.
Advcash
High-risk crypto merchants can get the payment processing solutions they need from Advcash, which is also known as Advanced Cash Limited. This company is a payment service provider licenced and authorised by the Belize Financial Services Commission (FSC). It was launched in 2014 to provide an advanced wallet, different brands of cards, and other innovative payment solutions. Its industrial partners include Binance, Kraken, BitGo, and Crystal.
High-risk merchants can use the API and other innovative tools of Advcash to automate inward and outward payments in digital currencies like BTC, ETH, and LTC, as well as fiat money like USD, EUR, and GBP.
Online shops, iGaming platforms, e-currency exchangers, cashback services, and a variety of businesses in different industries can connect to Advcash for free and enjoy most of its services without commission.
Peach Payments
Peach Payments is a trusted African payment processing service provider in the fintech space. It was founded by two South African immigrants, Andreas Demleitner (German) and Rahul Jain (Indian) in 2012 in Cape Town. The company offers innovative tools for secure, seamless, and fast integration and personalization of your e-commerce business.
The company provides plugins for you to integrate your digital business with other platforms, such as Xero, Woocommerce, Magento, and Wix. From betting sites to digital marketplaces, different high-risk businesses can benefit from using Peach Payments. They can accept all major credit and debit cards; support multiple payment methods; create personalised mobile and web-based payment solutions, and prevent fraud using 3D Secure and other enterprise-grade security tools.
NETELLER
Last but not least high-risk merchant account provider on our list is NETELLER, a popular digital service in use across many industries. This payment solution provider is famous for having a great e-wallet. In addition, NETELLER helps high-risk merchants who are into businesses like entertainment, travel, retail, dating, financial services, and social networking to build lasting client relationships.
If you are looking for more online payment options for your high-risk business, you can rely on NETELLER for the solutions you need. It serves merchants and customers in more than 200 countries, offering them localised services, including multilingual language support, on an international scale of operations. To learn more about NETELLER and its benefits and fees, read this overview.
Pros
- Flexible options for accepting payments
- Ability to sell a wide range of products
- Privilege of processing sales in high volumes
- Ability to accept international transactions
Cons
- Higher set-up fees due to the high level of risk involved
- Higher transaction fees, often between 4% to 10%
- Longer settlement period, which reduces chances of chargebacks
- Rolling reserve, which financial institutions use to reduce chargeback losses
Tips for Raising Your Chances of Qualifying for a High-Risk Merchant Account
Before you apply for a high-risk merchant account, there are other measures you might want to take to strengthen your application and position yourself for approval. You can try to do the following:
- Update your accounts—This will show your current financial situation.
- Ensure full compliance with industry standards—This will show that your business is operating legally and professionally.
- Get third-party fulfilment protection—This gives you extra security against chargebacks and refunds.
- Do your research and get different quotes—This will give you the advantage of negotiating for the best services from the top providers.
- Show the ability to keep chargebacks low—This will give you a high chance of getting accepted.
- Use offshore business accounts—This will position you in a more positive sense since you will be giving evidence of having a business account in another country.
- Get a better credit rating—This will show that you do avoid credit card mistakes.
What Fees Will You Pay for a High-Risk Merchant Account?
Accounts for high-risk firms are more expensive than accounts for low-risk enterprises. You will incur additional processing fees and other account-related fees since costs are unavoidable. The fees to expect include a setup fee, monthly or yearly fees, or a PCI non-compliance fee.
If you want to terminate the account before the deadline specified in the contract, you could also be charged an early termination fee. So be sure to carefully read the contract before signing the agreement.
There are other costs that you might need to keep in mind. They include rolling reserve and chargeback fees. A rolling reserve refers to a percentage (usually 5%–10%) of the volume of processed credit card transactions that your financial service provider maintains as an extra layer of protection against unexpected activities on your side, such as chargebacks and fraud cases. Also, chargeback fees may apply when a chargeback is filed by a cardholder. The financial institution charges this fee to cover the administrative cost of processing the chargeback.
How to Earn a Low-Risk Business Status
There are a few things you can do to increase your chances of getting your company labelled as low-risk, even though there is no automatic or instantaneous way to ensure it.
Retailers and other merchants can demonstrate their company's stability and profitability to processors by providing financial statements, limiting return and chargeback rates, and maintaining a solid credit history.
Furthermore, to ensure that chargebacks do not go beyond control, high-risk merchants can do the following:
- Provide clear billing information to your customers.
- Verify the identities of your customers when they pick up their orders. This helps to prove the legitimacy of every sale so that it cannot be disputed.
- Ensure that your sales receipt is detailed, providing important information such as your store’s address, email, phone number, and clearly lists the items purchased, their prices, and the time they were bought.
- Provide clear terms and conditions, including a return policy that is easy to understand.
One more thing to note is that, in some cases, it is possible to improve your risk level to a point where your bank or financial service provider can change the classification of your business from high-risk to low-risk. To achieve this and enjoy low fees and more privileges, you need to cooperate with your payment processor and follow every step necessary to minimise fraud and chargebacks.
FAQ
Companies that are considered to have a higher risk of going out of business due to chargebacks, fraud, and other financially unhealthy events are called high-risk commercial establishments.
Any commercial activity that is deemed by banks, financial institutions, or credit card processors to have a high risk of loss due to events like chargebacks and fraud is considered to be high risk.
High Risk Pay is a legit company that provides services to high-risk merchants. It has received no complaints in a long time and the Better Business Bureau rates it an “A+” service provider.
People who transact with businesses that have a high possibility of committing money laundering or financial fraud are classified as high-risk customers.
A high-risk product refers to an item that when purchased has a high possibility of causing pain to a consumer due to harm or financial loss.
This refers to a credit card issued for the purpose of carrying out high-risk transactions with high-risk businesses.
Conclusion
Businesses with a higher chance of chargebacks, fraud, and other forms of disputes are classified as high-risk. They attract higher fees and are not generally supported by banks and other financial institutions since their activities involve a high chance of loss. But when you work with a reputable and secure high-risk merchant payment processing account provider, such as those we have discussed in this article, you can be confident that you will benefit from a reduced risk of unsafe transactions like chargebacks and fraud.
