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What is a high-risk merchant?
A high-risk merchant refers to a business or individual operating in an industry that is considered to have a higher risk of financial loss, chargebacks, or fraudulent activities compared to other industries. These merchants often face challenges when it comes to obtaining and maintaining payment processing services.
A short high risk merchant list –
Online Gambling and Casinos
Due to the nature of the industry and potential for fraud or money laundering, online gambling and casino businesses are often classified as high risk.
Adult Entertainment
Adult websites, adult content subscriptions, and other adult entertainment businesses are considered high risk due to legal and reputational concerns.
Pharmaceuticals and Nutraceuticals
Businesses selling prescription medications, supplements, or herbal remedies face regulatory scrutiny and increased risk of fraudulent transactions.
Firearms and Ammunition
Merchants involved in the sale of firearms, ammunition, or related accessories are considered high risk due to legal and safety concerns.
Travel and Tourism
Businesses in the travel industry, such as travel agencies, timeshare sales, or vacation rentals, may be classified as high risk due to chargeback risks and potential for cancellations.
E-commerce and Dropshipping
Online businesses that sell high-ticket items, offer trial offers, or engage in dropshipping may be considered high risk due to chargeback risks and potential for fraudulent activity.
Debt Collection
Companies involved in debt collection services are often deemed high risk due to the regulatory landscape and potential for legal issues.
Cryptocurrency
Merchants dealing with cryptocurrency exchanges, trading platforms, or Initial Coin Offerings (ICOs) face regulatory uncertainty and increased risk of fraudulent transactions.
Tech Support Services
Businesses offering remote technical support or computer repair services have been associated with high-risk activities, including scams and fraudulent practices.
Multi-level Marketing (MLM)
Certain MLM companies have faced legal scrutiny, making the industry as a whole higher risk from a payment processing perspective.
What makes a merchant considered a high-risk merchant?
There are several factors –
- Industry-related risk
Certain industries inherently carry a higher risk due to their nature.
For example, businesses involved in online gambling, adult entertainment, pharmaceuticals, firearms, debt collection, or telemarketing are generally classified as high risk.
- High chargeback ratios
Chargebacks occur when customers dispute a transaction and request a refund directly from their credit card issuer. High-risk merchants often experience a higher volume of chargebacks, either due to dissatisfied customers, fraudulent activity, or industry-specific reasons. High chargeback ratios indicate potential financial risks for payment processors.
- Legal and compliance issues
Certain industries have stricter regulations and compliance requirements, such as financial services, pharmaceuticals, or alcohol sales. Non-compliance with these regulations can lead to legal repercussions, making these businesses riskier from a financial standpoint.
- International operations
Merchants doing business internationally, especially in countries with higher levels of fraud or weak legal frameworks, may be considered high risk due to the increased potential for fraudulent transactions.
- High average transaction amounts
Merchants that process high-value transactions face a greater risk of financial loss if fraudulent activities occur or chargebacks are issued.
- Poor credit history
Merchants with a history of financial instability, bankruptcy, or outstanding debts may be deemed high risk due to the increased likelihood of payment issues.
- Limited operating history
New businesses without a substantial operating history may be considered high risk as there is limited data to assess their financial stability and transaction patterns.
- Subscription-based or recurring billing
Merchants offering subscription services or recurring billing models may face higher risks due to customer dissatisfaction, billing disputes, or unauthorised recurring charges.
What is a high risk merchant account?
A high-risk merchant account refers to a specialised type of payment processing account that is designed to cater to businesses operating in industries considered to be high-risk.
Such industries typically have a higher likelihood of chargebacks, fraud, legal and regulatory issues, and other factors that may pose a challenge for traditional payment processors. To mitigate these risks, high-risk merchants are required to open high-risk merchant accounts.
These accounts are provided by specialised payment processors or acquiring banks that have experience and expertise in managing the risks associated with these industries.
The payment processor may also impose certain safeguards, such as rolling reserves or holdbacks, to mitigate potential losses.
Examples of high-risk merchant account providers include companies like Payline Data, Durango Merchant Services, Instabill, and CCBill.
⏩ A high risk merchant account instant approval isn’t possible in most cases. It takes at least 1-2 working days. And some merchant account providers even take a minimum of 5 days for approval, so if you are opening your account with them, you shouldn’t expect high risk merchant account instant approval uk.
How does a high risk merchant account work?
Strict restrictions imposed by merchant service providers can result in frozen funds, account suspensions, or even termination, leaving businesses in a difficult position. In fact, being terminated by a provider can have serious consequences. This makes it even more challenging to find a new payment processor.
However, there are specialised merchant services providers that focus on serving high-risk industries, offering a lifeline to businesses in need.
A high-risk merchant account is specifically designed to meet the payment processing needs of businesses operating in high-risk industries. Each payment processor has its own credit policy, which outlines the types of industries it is willing to support. These policies vary based on the processor’s ability to conduct thorough underwriting and due diligence, as well as the support they receive from their sponsor bank.
Processors with robust underwriting capabilities are able to take on more risk, allowing them to serve a wider range of high-risk industries.
Regardless of the reasons why a business is classified as high-risk, obtaining a high-risk merchant account opens doors to powerful payment processing capabilities that were previously out of reach.
What are the benefits if using high-risk payment processing?
Following are the pros of high risk payment processing –
Enhanced Security Measures
When it comes to protecting your business from fraud and chargebacks, high-risk payment processors go above and beyond. They employ cutting-edge security measures that are designed to thwart any potential threats, ensuring that your transactions remain safe and secure.
Flexibility to manage chargebacks
By understanding the unique challenges faced by high-risk industries, these payment processors set higher chargeback thresholds. This means that even if you encounter a higher rate of chargebacks, you won’t face immediate repercussions. It provides you with the flexibility to manage chargebacks more effectively.
Safeguard Against Account Termination
One of the biggest concerns for businesses in high-risk industries is the sudden termination of their payment processing accounts. However, with high-risk payment processors, you can rest assured that your account is less likely to face an abrupt shutdown. These providers specialise in serving risky industries, offering you a stable payment processing solution without the fear of unexpected account suspension.
Empowering High-Risk Product Sales
If your business deals in high-risk products, the last thing you want is constant interference from your merchant account provider. And thankfully, high-risk payment processors offer you the freedom and flexibility to sell your products without unnecessary restrictions.
Tailored Solutions and Dedicated Support
High-risk payment processors recognize that every business is different. Whether it’s integrating specialised features or adapting to your industry’s requirements, these providers are committed to supporting you with personalised assistance and guidance.
Which are the best high risk merchant account providers?
There are many high risk merchant services providers who have made their place in the top list; some of those are –
PaymentCloud
- Best suited for software integrations.
PaymentCloud takes a proactive approach to assist businesses at every step of the way. It understands that finding the best rates is crucial for every business, which is why it leverages multiple backend processors to secure the lowest possible rates for you.
It provides ongoing assistance for key functions. Whether it’s managing cardholder subscription migration or setting up advanced fraud and filtering measures for your payment gateway, its team is here to support you.
It makes the migration process easy and familiar. With PaymentCloud, you can choose from a variety of pricing structures that you’re already familiar with, such as fixed-rate, interchange-plus, or tiered pricing.
It integrates with all payment gateways, allowing you to continue using your preferred provider without any interruptions.
Pricing
- $10-$45 monthly fees.
- $15 per month payment gateway fee.
- $15-$45 per month virtual terminal fee.
- Transaction fee –
- 2%-3.1% for low risk.
- 2.3%-3.4% for medium risk.
- 2.7%-4.3% for high risk.
- $25 chargeback fee.
Durango Merchant Services
- Beat for Online Sellers.
Durango Merchant Services stands out for its expertise in handling high-risk accounts. What sets it apart is its exceptional willingness to assist small businesses with bad credit in obtaining reliable payment processing services.
It technology provides a seamless and user-friendly experience for customers, while the built-in load balancing feature of Durango Pay payment gateway ensures.
Furthermore, it is an offshore high risk merchant account provider.
Pricing
- $30 monthly fee.
- 15-25 cents authorization charges.
- $25 chargeback fee.
- Zero early termination charges.
- 0%-10% rolling reserve requirements.
- Transaction fee –
- 10 cents per transaction in the payment gateway.
First Card Payments
With over two decades of industry experience and strong partnerships with over 30 financial institutions, First Card Payments has established itself as a trusted name in the field. This extensive network allows it to secure approvals for its clients in the high-risk merchant services sector.
Whether you’re looking for ACH, in-person, or online payment processing, it has you covered.
What sets it apart is its versatility in working with various types of high-risk merchants. It excels in assisting offshore businesses and has a particular expertise in serving B2B enterprises.
In addition to its payment processing services, it goes beyond the transactional aspect by offering valuable operational support.
Moreover, it offers a distinctive promise to reduce merchant fees by 25% for businesses that switch to its services.
Pricing
- $15-$30 chargeback cost.
- Zero early termination cost.
- Free setup.
- Zero application charges.
Soar Payments
It stands out as a leading provider of high-risk merchant services, catering to a wide range of industries and business types. It has integration with accounting, CRM, and ecommerce platforms.
Unlike other highly-rated alternatives, it provides instant online quotes and boasts a 24-hour approval process, which significantly speeds up the onboarding experience.
Pricing
- $19-$45 average monthly charges.
- Zero application and set-up charges.
- 5-10% rolling reserves.
- $25-$30 chargeback cost.
- Early termination charges depend on the merchant account.
SMB Global
- Known for its chargeback management capability.
SMB Global offers specialised solutions exclusively tailored for high-risk and international businesses. As a partner of Payline Data, a widely recognized and trusted low-risk processor, it brings a wealth of expertise and cutting-edge features to the table.
But that’s not all—it understands the importance of seamless integration with your existing systems. That’s why it offers two popular payment gateway options, both capable of integrating with over 175 online shopping carts.
It stands out by offering zero rolling reserve requirements, providing the financial freedom to reinvest in your business and fuel its growth. It also provides unlimited processing volume.
Pricing
- Pricing is not disclosed yet.
eMerchantBroker
- Best suited for online CBD.
With a remarkable 99% payment processing approval rating for its merchant clients, it is the go-to choice for CBD businesses seeking reliable and accessible payment solutions.
Its dedicated 24/7 customer support staff is always ready to assist you.
If you are in CBD oil, edibles, extract or vapes business and facing issues in getting approval for a merchant account, you can reach out to EMB.
Pricing
- 1-3 years of contract length.
- $0-$595 early termination charges.
- 0-10% rolling reserve.
- $35 is the chargeback cost.
- Payment gateway charges –
- $0 with proprietary payment gateway
- $25 with partners.
- Monthly account charge is not fixed.
- Transaction charges – not fixed.
HighRiskyPay.com
High risk merchant highriskpay.com has expertise and long-term relationships with many financial institutions. Besides, it also offers many features like –
- Chargeback management.
- Fraud prevention.
- ACH processing, etc.
- Set up an account even with bad credit.
Apart from this, the approval process generally for high risk merchant account highriskpay.com takes one to two days which is faster than other high risk merchant account providers.
Although, the underwriting process at this provider might take some additional days than normal.
Pricing
- Monthly charge is $9.95.
- Payment processing fee is 2.95% + 25 cents. Although it may vary on the type of transaction you make or your credit.
- Zero setup charges.
Paykings
It is an international payment provider that offers B2B solutions to high risk industries like adult, dating, debt, firearms, vape, etc.
Transaction charges at Paykings begin at 2.49%, although it also depends on your processing history and business vertical.
Features –
- Transaction security.
- ACH payment processing.
- Recurring payments.
- Chargeback management is great.
- Offers different credit card processing ways.
- MO/TO transactions.
Which are the high risk merchant account providers in usa?
Here’s a short list of some of the main high risk merchant account providers in usa –
PaymentCloud
PaymentCloud specialises in providing high-risk merchant accounts for businesses that may face challenges in obtaining traditional payment processing solutions.
They offer customised payment solutions tailored to the specific needs of high-risk as well as low risk industries.
Pricing
- Free setup.
- $15 per account for low-risk accounts.
- Processing rates aren’t fixed.
- Interchange + $.08-.10 + 0.05%-0.30% per transaction for low risk accounts.
Durango Merchant Services
It is another prominent provider of high-risk merchant accounts. They cater to various industries, including nutraceuticals, online gaming, CBD, and travel services.
It offers features such as –
- credit card processing
- eCheck processing
- International payment processing.
- Provides tools to help merchants manage chargebacks and mitigate fraud risks.
- Cryptocurrency merchant accounts are available
- Dedicated account manager.
Pricing
- Processing rates and account fees vary.
Easy Pay Direct
It specializes in providing payment solutions for high-risk businesses, including subscription services, e-commerce, and firearms.
It offer features like –
- Credit card processing
- Virtual terminals
- recurring billing
- Chargeback protection
- EPD gateway is available
- Countertop credit cards.
It focuses on delivering efficient and secure payment processing services to high-risk merchants.
Pricing
- Account setup cost is $99.
- Zero early termination charges.
- Annual and monthly charges vary.
- $24.95 is the monthly account maintenance cost.
Note – While these providers specialise in serving high-risk industries, each business has its own specific requirements. So it is advisable to research and compare multiple providers to find the one that best suits your specific business needs and industry requirements.
What is a bad credit merchant account?
A high risk merchant account bad credit merchant account refers to a specialised payment processing service designed for businesses or individuals with a bad credit history. When traditional financial institutions may decline their applications for a regular merchant account due to credit issues, a bad credit merchant account steps in to provide an alternative solution.
Having bad credit typically means that a person or business has a history of late payments, defaults, or other financial difficulties that have negatively impacted their creditworthiness. This can make it challenging to secure the necessary payment processing services to accept credit card payments from customers.
And that’s when a bad credit merchant account helps.
What is an offshore high risk merchant account?
Offshore merchant accounts are those that can be based anywhere in the world. There is no necessity on the account being based in the home country.
Offshore refers to the location of the acquiring bank or payment processor, which may be situated in a different country. These offshore banks have more flexible underwriting standards and a higher tolerance for high-risk businesses.
By establishing an offshore high-risk merchant account, businesses gain access to a range of payment processing services specifically tailored to their needs.
These accounts provides many benefits like –
- increased stability and continuity for businesses that may face obstacles in their domestic market.
- Better rates.
- Greater privacy.
Some offshore high risk merchant account providers are –
- PaymentCloud
- Host merchant services
- Easy Pay Direct
- PayKings
- Paynetsecure
- Instabill
- EMB
- SMB global