With a high-risk merchant account, the payment processor and card networks assume that the business has a greater risk of defaulting on payments, incurring many chargebacks, or committing fraud.
- High-risk enterprises are often new, have a history of credit problems, or operate in an area deemed contentious or uncertain.
- Even eCommerce businesses automatically fall into the high-risk category because they accept card-not-present transactions—card payments when the merchant doesn’t physically “see” the customer’s card.
- Whether justifiable or not, a business deemed high-risk may be subject to additional costs associated with credit card transactions, higher processing rates for payments, and more stringent terms and conditions on compliance and reporting.
There is a risk of being labeled a high-risk merchant if your chargeback rate approaches or exceeds a specific threshold. Without lowering your chargeback rate below the threshold, card networks may refuse to do business with you, making it impossible for you to accept card payments.
High Risk Merchant Accounts Vs Low Risk Merchant Accounts?
An acceptable level of risk to a payment processor can be demonstrated by a few common factors. In general, low-risk retailers have:
- The volume of sales is typically under $20,000 per month.
- Regular Purchases Below $500 on Average
- The use of a single currency
- There are hardly any returns, and chargebacks are extremely rare.
- Sectors with a low-risk profile
How Do I Get a High-Risk Merchant Account?
To open a merchant account, you must present legal and financial paperwork. Your payment processor will determine whether you are a high-risk or low-risk merchant once they have reviewed your application.
If your company deals with high-risk customers, you should research to identify a payment processor that best matches your needs. Some of the most excellent high-risk merchant account providers are listed by Forbes Advisor.
It’s essential to read the fine print before signing on with a payment processor because each bank and platform has its policies regarding high-risk merchants.
High-Risk Merchant Account Fees
Many business owners avoid opening high-risk merchant accounts because they fear paying higher processing fees. Clearly not the case. In many cases, Payment Cloud may save you money on processing fees by switching you to a better processor suited to your company’s needs. As an added service, we will examine your company and credit card portfolio to determine the most cost-effective and convenient pricing structure for your business needs. Comparatively, the pricing policies of companies that approve merchant accounts rapidly tend to be generic rather than customer-specific. This could be problematic for a company if it regularly processes many orders.
Choosing the Best High-Risk Payment Processor
You should be aware that not every processor that provides merchant accounts offers high-risk merchant services. There are a lot of providers out there who would give you a high-risk merchant account just to get your company, but they aren’t equipped to deal with the unique needs of your industry. Their credit policies might not even be compatible with your drive or SIC code, leading to an instant declination. The lack of due diligence and proper underwriting in high-risk merchant accounts makes you, the merchant, more susceptible than you would be with a merchant service provider who specializes in high-risk services.
Be sure your chosen supplier can not only issue a high-risk merchant account but also adequately supports one. PaymentCloud’s extensive expertise in the industry and established banking relationships allow us to streamline high-risk payment processing for our customers.
How do I apply for a high-risk merchant account?
The application for a high-risk merchant account can be found online. It goes without saying that locating a trustworthy high-risk payment processor is essential if you intend to take credit card payments.
The application for a high-risk merchant account is quick and easy. By way of illustration, if you decide to go with SecurionPay as your payment processor, we will assist you in locating a suitable bank for your company. The acquiring bank’s approval of your company is necessary before you can begin accepting credit card payments online or through a mobile device.
Final thoughts
Clearly, several factors make your company a risky investment. However, the process will be streamlined and stress-free if you go through a reputable payment gateway to get a high-risk merchant account
It stands to reason that more stringent rules would apply to organizations where conflicts are more likely to arise. However, you can rest easy knowing that the possibility of chargebacks and fraud is reduced when you use a trustworthy high-risk payment processor that puts security first.
FAQ
Do I need a high-risk payment gateway?
High-risk payment gateway is a deceptive word. Despite the “high-risk” nature of the merchant account, there is no such thing as a “high-risk” payment processor. Instead, your gateway can handle high-risk transactions and has been configured accordingly. Fortunately, we provide various payment gateway settings to help you minimize chargebacks and fraud without sacrificing revenue.
Is Square a high-risk merchant account?
As of now, Square does not provide service for high-risk businesses. Indeed, Square doesn’t offer “real” merchant accounts. To facilitate transactions between its customers and other payment networks, Square provides a unified statement. It’s not as flexible as other options, but it’s much easier to use. Square cannot offer merchant services tailored to the individual needs of businesses since it aggregates its users in this way.
In addition, Square doesn’t work with companies that pose a significant danger to their customers. If you use Square to process payments for your high-risk firm, they will cancel your account once they’ve reviewed your application, leaving you without a way to take credit card payments.
What does a high-risk transaction mean?
A deal may be considered high-risk for several different reasons. An example of a high-risk transaction would be the sale of a product in an industry subject to government control, such as the sale of guns, tobacco, or alcoholic beverages. Any deal with a ticket price higher than $5,000 may fall into the “high-risk” category. High-risk transactions include any sale of a live event ticket with a delivery date in the future. This includes but is not limited to a concert, festival, and airline tickets.
Does Stripe handle high-risk businesses?
Stripe, as a payment processing company, does not work with high-risk enterprises. Payment service providers provide businesses with a simple means to begin accepting payments immediately, a sector that has seen significant growth in recent years. However, companies are not given the necessary support due to a lack of customization options, processing constraints, and elusive customer service.
