High-Risk Merchant Account: The Ultimate Solution to Your Business

A high-risk merchant account is a payment processing account for businesses viewed to be of high risk to the banks. However, high-risk businesses are more prone to chargebacks. Therefore, they have the need of paying higher fees for merchant services. If a business with a greater risk of fraud or chargebacks wants to accept card payments. For example, some processors won’t work with specific industries, like tobacco and firearm sales. Many are wary of businesses that have international service, have subscription pricing or don’t have much cash in the bank. However, if you run a so-called high-risk business and want to accept card payments, you can apply for a high-risk merchant account.

Every provider has a different set of criteria for high-risk merchant accounts. Such as the high volume of money involved, international payment, working in a high-risk industry, or having a low credit score. When you apply for a merchant account, you need to give business and tax documents. After processing your application, your payment provider will assess. It is to see if you are a high-risk or low-risk merchant and work their plan on that. Some payment processors are more suited for high-risk clients. However, before choosing a payment processor, you need to read the contract with care. Every bank and payment processing platform is different and has different terms for the merchants they label as high-risk.

What is a High-Risk Merchant Account

A high-risk merchant account is a payment processing account for businesses viewed to be of high risk to the banks. Merchant accounts, a crucial instrument in payment processing, are obtained through a merchant’s bank or payment processor. These businesses, however, seek to reduce their exposure while issuing merchant accounts. This makes it challenging for many high-risk businesses to get a merchant account through regular channels.

As a result, businesses that do not get a merchant account from regular banking institutions work with processors that can provide high-risk merchant accounts. They link clients to resources that assist their high-risk payment processing needs through this procedure. Here are some of the reasons why any firm might be labelled high-risk.

  • New business: However, if your company was recently launched, you can not present a large transaction history to the bank or processor.
  • Not enough transactions: The merchant account provider needs to calculate your chargeback ratio. Therefore, it may be the case that you do not have enough average score of money work. This could put your business in the high-risk category.
  • Industry type: Some industries such as travel, gambling and adult sites are mostly known for large chargebacks. This is because they have high number of cancellations.
  • Many chargebacks, refunds and fraud: After your business has reached a large number of monthly transactions, your risk goes up. It is the case if you have a high average of chargebacks, refunds or fraud.

High-Risk Merchant Account vs. Low-Risk Merchant Account

Before you apply for a credit card processing and merchant account, you will need to see if you are a low-risk merchant or a high-risk one. During the application, be prepared to give at least three to six months’ worth of bank records. The sources and destinations of the money should be stated in these reports. A few years’ worths of tax returns may be requested by some banks. Merchant account providers generally categorize businesses into two types. These are based on several factors.

High-risk merchant account

Your processing history and your chargebacks can put you in the high-risk category. Merchant account providers can add their own terms to the list. However, here are a few that will decide if your business is high-risk:

  • $20,000 or more in monthly sales
  • Credit card transactions that average over $500
  • Business with countries known for high levels of fraud
  • History of poor credit
  • Frequent chargebacks

Low-risk merchant account

A low-risk merchant may need to meet many demands. However, the most important are : low revenue, few transactions, and low chargebacks and returns. These are other features of a low-risk merchant:

  • Credit card transactions are $500 or less.
  • Transactions adding up to less than $20,000 monthly.
  • The industry is considered low-risk, such as essential goods, clothing, and household and baby items.
  • The chargeback ratio is low. It is less than 0.9% of the total.
  • Business is completed in low-risk areas – such as the USA, Europe, Japan, Canada and Australia.
  • The rate of returns is low.

How to Get a High-Risk Merchant Account

If you need this type of account, you can increase your chances of finding a payment partner by following these best practices:

  • Shop around for price quotes – High-risk merchant accounts are best for businesses, but there are very few who want to work with them. Some account providers will raise their processing costs to profit from the few options available to high-risk firms. The clients should try to get the best prices possible and make sure their account provider isn’t trying to take advantage of their high-risk status. If you’re already processing payments and want to change providers, experts recommend a side-by-side analysis of your current rates and potential rates from any other. Therefore, one can quickly decide whether the jump will actually result in rate savings.
  • Review your cash levels. Cash on hand can show a stable position. Banks like to see 25% to 50% of monthly card transaction volume sitting in your account.
  • Assess which variables are in your control. You don’t know if credit card firms view your sector as high-risk. However, if such factors play a role in your position, you can take actions to raise your credit score or lower chargebacks. If you can lower your risk, discuss it with your payment provider since you might be able to get better rates.
  • Communicate to customers clearly. Some fraud chargebacks are the result of unhappy customers. So, you need to take steps to reduce those. Therefore, check if your return policy or shipping policy is easy to understand and if customer care is available.
  • Be ready to learn. Don’t pretend to be a payment expert. Instead, rely on the expertise of the payment processor. Ask for their help in setting up your payment process and be prepared to work as per their advice.

Pros and cons of high-risk merchant accounts

A high-risk merchant account is a payment processing account for businesses viewed to be of high risk to the banks. However, high-risk businesses are more prone to chargebacks. Therefore, they have the need of paying higher fees for merchant services. If a business with a greater risk of fraud or chargebacks wants to accept card payments.

For example, some processors won’t work with specific industries, like tobacco and firearm sales. Many are wary of businesses that have international service, have subscription pricing or don’t have much cash in the bank. However, if you run a so-called high-risk business and want to accept card payments, you can apply for a high-risk merchant account. However. There are pros and cons of having this type of account, like

Pros

  • Long-term scope of growth
  • High profits
  • Acceptance of multiple currencies
  • High chargeback protection
  • Reserve account for surprise chargebacks
  • Processing of credit card transactions even with bad credit or financial setbacks

Cons

  • Higher processing fees
  • Potentially mandatory reserve account, which can be as high as 50% of the monthly volume
  • Rolling reserve that can be held up to 180 days after account closure

High-Risk Merchant Account Instant Approval

In reality, there isn’t such a thing as truly instant approval for any type of merchant services account. The reality is that it always takes longer to get final grant for a high-risk merchant account than a low-risk business. In most cases, you can expect ordinary low-risk businesses to get clear within a day or two. On the other hand, high-risk merchant accounts can take at least three business days for the same. However, you need to know that approval for your merchant account is actually a two-step process. First, you must pass by your merchant account provider. Second, you must get approval by the bank or processor that is going to give green signal your account and process your transactions.

There are, however, some excellent merchant account providers out there that are skilled at obtaining clearance for high-risk accounts. They will thus cooperate with you to organise your documents and locate a bank that will grant you an account. However, it is feasible to receive clearance swiftly using highriskpay.com. Highriskpay.com’s approval procedure is normally completed in 24 to 48 hours, which is quicker than the majority of other high-risk merchant account approvals. Therefore, it is important to open your merchant account as soon as you can. Their approval rating is 99%. It means that you can start receiving payments fast and simply and that your special business will get clear pass.

High-Risk Merchant Account Providers in USA

PayKings

PayKings has payment solutions for companies working in high-risk sectors. Therefore, it shows that as payment processing service providers, banks are ready to get work done for the higher risk of companies that need a high-risk merchant account. Their high-risk payment gateway makes high-risk credit card processing safer and more secure.

HighRiskPay

Since 1997, HighRiskPay has had some of the fastest growth in the US credit card market. They are famous for giving merchant accounts and high-risk merchant accounts. They do, however, offer a large countrywide network that connects to merchant accounts with an effective credit card processing service via our processing banks. Customers can keep their firms in good shape thanks to the low rates.

PaySpace

Being one of the most powerful and efficient card transaction technical processors, PaySpace offers merchants of all types reliable and secure payment processing solutions. Therefore, they offer reliable and secure electronic technical payment help thanks to which merchants no longer need to worry about payment methods to offer to their customers. Instead, they can concentrate on increasing sales volumes and providing their clients with better services.

High-Risk Merchant Account in India

 ePay Global

It is a professionally High-Risk merchant account provider in India, Which offers reliable and secure merchant service. Due to having vast experience in providing high-risk merchant services, they have earned a huge reputation from our worldwide clients. The professional team of payment gateways assists you throughout the high-risk merchant account process from application to approval.

PayKun

PayKun Payments Solution is one of the most trusted payment gateway service providers in India. It is to provide the most affordable payment gateway for all types of businesses with the lowest transaction discount rates and no extra charges applicable. Therefore, PayKun is featuring with over 120+ payment options which include various banks’ credit cards, debit cards, net banking, and wallets to accept payment easily. We provide trouble-free fast onboarding and Easy integration-technical support and to feel the service strength we provide 24/7 quick customer support through chat, call, and email.

F.A.Qs

1. What is a high-risk merchant account?

Ans. A high-risk merchant account means that your payment processor has labelled your business at a higher risk of fraud or chargebacks. High-risk merchant accounts pay higher processing fees to compensate for the risk the payment processor is taking on.

2. Why do you need a high-risk merchant account?

Ans. If you’re a new business, you have a bad credit rating, or your industry is considered risky, you may need a high-risk merchant account in order to take card payments. And to compensate for the increased risk that your payment processing provider is taking on, you’ll pay higher fees for the privilege.

3. What is the high merchant risk in Slice cards?

Ans.  A high-risk merchant account is a payment processing account for businesses that are high risk to the banks. As high-risk businesses are more prone to chargebacks, they come with the need for paying higher fees for merchant services.

4. How much does a high-risk merchant account cost?

Ans. One can expect to pay on average ~$100 per month for a high-risk merchant account, on top of a $500 credit card merchant fee to Visa and MasterCard, each, on top of potential sign-up or start-up credit card processing fees.

5. How do you solve high merchant risk?

Ans. Make sure your processing is PCI- friendly and 3D Secure. By proxy that means you should have your payment service provider as your processer. Always verify billing addresses and CVV codes in your gateway. Make sure you’re working with trusty and well-known merchant services.