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8 Merchants Who Need a High-Risk Credit Card Processor STAT



8 Merchants Who Need a High-Risk Credit Card Processor STAT

A merchant account is one that a payment processor assigns to a company that has a higher risk of fraud and refunds. Payment processors make this decision based on variables such as the company’s type, payment situation, and geography. Merchant account companies have their standards for classifying businesses based on their risk, although both categories of retailers have numerous traits.

merchant account

If you have any high risk payment processors, it will significantly influence how much it costs you to take payment card payments.

What Is a Merchant Account?

After registration has been completed, monies from your company’s credit and debit card operations are placed into a payment method issued by your payment processor. The money is then put into your company’s checking account. As a result, merchants profit since most payment processors put resources into their accounts within one to two days after the payment, although they wait for the actual monies from the financial institution.

Customers must have merchant accounts for payment processors to take on the risk of processing transactions. For example, when a payment is completed, several things might go wrong: the payment may be judged fraudulent, the consumer may request a chargeback, or the transaction may be in contravention of the processor’s service agreement. When this transpires, the credit card processor will demand that the merchant account owner deal with the problem — because there is always the risk that the cardholder may refuse or simply vanish.

merchant account

If this occurs, the payment processor will be left in the lurch. The monies from the transactions have already been transmitted to the merchant’s company financial institution, thus the payment processor is out of luck. The costs connected with a payment processor are simply insurance against this happening.

Interchange-plus and stratified pricing are the different sorts of merchant accounts available. A tiny proportion of a transaction (paid to the selective service system) plus a modest set charge is what exchange of information pricing entails (paid to the payment processor). For example, if you use Eventbrite as your payment processor, each credit and the direct debit transaction will cost you 2.6 percent plus 30 cents. Low-risk businessmen usually get better terms when it comes to interactions pricing.

The pricing structure for tiers is a little more nebulous. Guess it depends on how qualifying the purchase is. Your payment processor will charge you a varying cost. In other words, the riskier the transaction is to the processor, the more the processing fee you’ll have to pay. The merchant’s understanding of how the processing qualifies the purchase is frequently ambiguous. Tiered pricing is, on average, more costly than interactions pricing.

What Is a High-Risk Merchant?

The bigger the risk, the more chargebacks a company has. As a result, the most important elements are industry credibility and being able to retain (a chargeback percentage of less than 0.9% of all transactions is preferred).

Here are some general criteria of a high-risk merchant. However, keep in mind that they might vary greatly depending on the guidelines of a particular payment processor:

  • Monthly sales volume of more than $20,000
  • The average credit card purchase exceeds $500.
  • A company provides goods and services to nations with a high rate of fraud.
  • Excessive procedure for collecting and a terrible credit history

Who Needs a High-Risk Merchant Account?

The travel company is an industry of a high-risk company, as several causes might cause disruptions. This frequently results in a large number of reimbursements and chargebacks from customers. Gambling, currency trading, and adult-themed web pages are just a few examples.

merchant account

There are a variety of sectors and company structures that are vulnerable to fraudulent charges, so here is a list of the most prevalent sorts of businesses that require high-risk payment solutions.

  1. Charter planes or airlines
  2. Companion or escort agencies
  3. Adult cellphone talks, adult bookshops, online adult subscription or matchmaking services, adult gear or toys are all examples of sexually-oriented or sexual retailers.
  4. Modelling or talent agencies
  5. E-books (copyrighted material)
  6. Multi-currency sales
  7. Brokering
  8. Any type of weapon, including firearms, knives, automatic weapons, or ammunition. Any weapons components are also included (i.e., butts, triggers, magazines, etc.)

To take credit card transactions on your website, you’ll need a high-risk merchant account if you’re in one of the businesses listed above or something comparable. If you’re a high-risk merchant, you’ll have to pay a greater business account fee than other merchants.

Fees For High-Risk Merchant Accounts

The unpleasant reality is that high-risk merchant accounts are more expensive than low-risk merchant services when it comes to costs. You must expect to spend more on administrative fees and checking accounts since costs are unavoidable.

merchant account

However, you should be conscious that high costs for high-risk merchant accounts were formerly the norm, and you can now locate payment processors that provide affordable rates customized to your enterprise. Stick to the outdated strategy with a 15% commission rate or possibly higher costs. You don’t have to be locked into three- to five-year agreements. The same may be said for additional charges.

Several high-risk payment processors may still cost you a startup fee, monthly and yearly fees, and even a PCI fee, so make sure you read the contract carefully. In addition, if you want to shut the subscription before the contract’s end date, you may be charged an outstanding balance. The terms of the termination charge should be stated in the contract, so make sure you read it well before signing it.


Because the payment processing business is evolving, seek high-risk payment processors that only compensate you for transactions taking place on your application or website.

There are a lot of high-risk credit card processors out there, so do your homework before deciding on a payment processor. It’s never simple to choose a high-risk payment service that’s a good fit for your business. When applying for a high-risk payment processor, keep in mind that the restrictions may be more stringent than those of a standard business account, so read your agreement carefully. Examine any hidden or additional fees, charges, and the size of the rolling buffer.





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