High Risk Merchant Account - High-Risk Payment Gateway

Businesses that are considered high risk are ones that may sell items that fall into areas of adult entertainment, online gambling, supplements, and eCommerce. Even though the items sold are legal, banks see these businesses as higher risk. This means that businesses that fall into the category of high-risk can have a difficult time obtaining a merchant account.

When you can’t get a merchant account, you ultimately cannot accept credit cards, which can be detrimental for any and all businesses.


What is a High-Risk Merchant Account?

In order to accept credit cards as payment, you’ll have to understand that there will be a cost associated with that. The major credit card companies like Visa, Discover, Mastercard, and American Express, charge interchange fees in order for you to use their network. Merchant service providers also charge processing fees to connect the issuing bank to the acquiring bank.

High-Risk merchant processors assume the majority of the risk during your transactions, so they want to be able to make sure that they are covered.

A high-risk merchant account is essentially a merchant account for a business or industry that faces the risk of chargebacks and fraud or borders on legality.

Am I a High Risk Merchant?

In order to determine whether or not you’re a high-risk merchant, merchant service providers determine your level of risk, similar to that of applying for a loan. There is an underwriting process that the merchant services provider will go through to estimate whether or not the risk of adding your business to their portfolio is worth it.

Some things they will take into consideration are:

  • Company financials
  • Your personal credit history
  • Number of years in business
  • Merchant account history
  • Type of business

There are a number of businesses and industries that are considered high-risk almost automatically by banks. These include:


Controlled substances and medication are a risky business because they can be abused and misused. Additionally, the cannabis industry is considered high-risk because the laws have continued to change over and over again. Although marijuana is legal in many states, banks are backed by the federal government, so they aren’t going to easily hand out a merchant account to a cannabis or CBD business.

International Businesses

A business that crosses international lines is going to be considered high risk because this increases the risk of fraud. If your business is overseas with offshore merchant accounts, and the majority of your customers are based in America, banks will see this as risk.


Gaming is an industry that banks have learned has high fraud and chargeback rates. It’s also another one, like the cannabis industry, that has a difference of opinion between state and federal laws.


While there are fraud and legal matters to consider when it comes to firearms, banks see this industry as a risk by association. While many Americans believe in their right to own a gun, there is a stigma on the matter that makes banks not want to be associated with the industry.

Adult Entertainment

Finding a merchant account for adult entertainment may also be difficult because of the laws and risk by association. Adult entertainment counts as anything from dating sites to pornography.


The hospitality industry, including hotels and travel agencies, are also known as high risk because they face tons of chargebacks from unsatisfied or fickle customers.


Even if your business sells products that both the state and federal government agree are completely legal, you’ll still have a hard time acquiring a merchant account if you have an eCommerce business. In fact, any business operating with card-not-present transactions is labeled as high-risk.

High Volume Transaction Businesses

While the more sales you have, the better, any business with more sales volume can be flagged as high risk. This is because banks see your business as the more sales, the more risk of chargebacks.

Options for High Risk Merchants

If your business falls into one of the categories that’s labeled as high risk, you can still accept credit cards with high-risk merchant processing companies. High-risk credit card processing companies understand your business’ needs and can help you start accepting credit cards as soon as possible.

How Does a High-Risk Merchant Account Work?

  1. A customer visits your website and places an item in the cart. They then go to check out and input their credit card information into the payment gateway.
  2. The payment gateway sends the details to the acquiring bank or payment processor and requests authorization.
  3. The processor sends the transaction to the card association, which then passes it onto the issuing bank.
  4. The bank approves or declines the transaction based on the funds in the customer’s account.
  5. The approval or denial message is sent back by the processor.
  6. If approved, the payment lands in your merchant account.

A merchant account is a type of bank account that holds the funds you receive through sales using credit or debit cards. It acts as a holding place for funds before they are transferred to your business bank account.

A merchant account is just one of three elements that you need in order to accept credit and debit card payments online. You’ll also need a payment gateway and a processor.

High Risk Payment Gateway vs. Merchant Account

Once you have a merchant account, you’ll need a payment gateway to serve as the virtual POS for your website. In a typical, physical setting, a customer purchases an item by swiping their card through a machine to begin the transaction.

The card reader or POS system figures out whether the customer’s card has enough funds on it for the transaction to continue. Essentially, the request for the transaction comes through the payment gateway. The details of the customer’s bank account and the price of the item are sent to the issuing bank or company.

From there, the account is checked to indicate whether or not it has sufficient funds. If the account does have sufficient funds, the transaction is authorized, transferred out of the customer’s account, and placed into the merchant account.

Payment Processor

The third element is the payment processor, who does a lot of the work. The payment gateway sends the transaction request, which is then received by the processor. The payment processor analyzes the request for the funds to be transferred and sends an approval or denial based on the funds.

Payment gateways and credit card processors work together with merchant accounts to process transactions quickly and seamlessly. All of this extensive communication is done within seconds.

Applying for a High-Risk Merchant Account

In order to get a high-risk merchant account, you will likely have to fill out an online application with a high-risk merchant account services provider.

The process for applying for the merchant account is straightforward, as they will pair you with a bank that matches your business needs. Once you are approved, you can start processing payments online.

In order to prepare for a merchant account, you’ll need the following documentation:

  1. Incorporation certificate
  2. Processing history
  3. Your business license

Depending on the merchant service provider you choose to work with, you may need to provide more documentation about your business. You’ll also have to prepare your website based on their compliance requirements.

To apply for a merchant account or to learn more about high-risk merchant accounts, contact us today.

High Risk Merchant Account Fees

High merchant accounts may cost more than accounts for businesses that are considered low risk. That being said, many high-risk merchant account providers offer competitive rates so that you can find which best suits your business.

Some account providers will charge you a setup fee, monthly and annual fee, or a PCI fee, so it’s important that you thoroughly read the contract. Additionally, if you choose to terminate your contract, you may be subject to a termination fee.

Here are a few of the different types of costs you can expect with a merchant account for high-risk businesses:

Rolling Reserve

A rolling reserve is an additional layer of protection for the bank against chargebacks and fraud. This means that a certain percentage of the credit card processed volume is secured, and it will depend on the business model and processed volume.

This percentage is kept on hold for a defined period of up to six months before it is released.

The higher the risk that your business is, the higher you can expect the rolling reserve to be from the bank. A rolling reserve may also be offered to low-risk merchants if they have no credit history as well.

Chargeback Fees

Chargeback fees apply when your customer, the cardholder, files for a chargeback and asks their bank to dispute the charge

This can happen for any number of reasons, from an unsatisfied customer to a mistake made on your end. These fees cover the administrative costs of processing the chargeback.

Low-risk businesses also face chargeback fees.

Benefits of a High-Risk Merchant Account

Global Transactions

With a high-risk merchant account, you can accept transactions in various currencies and sell to customers outside of the US. This means that you can access more customers without putting in much work.

Chargeback Protection

In order to keep your merchant account in good standing, you’ll need protection against your biggest nemesis, the chargeback. With protection in place, you can keep your account in good standing even with a few chargebacks. However, this doesn’t mean that you should neglect your management of these problems.

Merchant errors can lead to chargebacks, which can include things like poor customer service, failing to issue refunds when returns are made, and more, so it’s important that you’re vigilant when it comes to your own chargeback prevention.

Increased Profits

By allowing your customers to purchase your products with a credit card, you can sell more items to more people and boost your business to earn more money.

Considerations When Looking for a High-Risk Merchant Account

There are tons of high-risk merchant services providers out there, so it’s up to you to do your due diligence when shopping around for your best partner. Here are a few things you should look for:

Quality Support

Your merchant account provider should be ready and available to help you when anything happens that could be detrimental to your business.


As your business evolves, so should the way you handle processing payments. A high-risk processor should let you implement payment methods that tailor to the needs of your customers and your business.

Make sure that you’re able to customize your payment form and discuss rates, conditions, and features that are tailored to your ever-evolving business plan.

Transparent Pricing

Not all payment processors are created equally. This means that some will be very secretive about their pricing, while others are straightforward with you. When it comes to your business, you should require that all of your dealings are transparent, with your payment processor being no different. Make sure that you understand any of the additional costs and that there are no hidden or extra fees.


As a high-risk merchant, you’ll need to follow strict security rules. Your payment processor should provide you with tools to ensure the safety of sensitive data, including anti-fraud tools that can keep your business away from those who commit fraud. Make sure that you understand their approach to security before you agree to work with them.

High Risk Merchant Account Instant Approval

If you’ve been denied a merchant account or your account has been shut down, you need to be able to process credit cards as soon as possible to keep your business running. An instant approval merchant account provider specializes in high-risk businesses to help them get credit card processing when they need it.

Instant approval for a merchant account means that you can start processing cards on your eCommerce website in as little as 24 hours, even if you’re considered high risk.

Contact us today to learn more.

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