Merchant Accounts: What Businesses Are Considered High Risk?

Florence Carpenter

With the rising popularity of e-commerce transactions worldwide, investing in a merchant account for your business is essential. However, high-risk businesses are more prone to chargebacks and tend to come with more expensive merchant processing fees as a result. 

Some businesses that are considered high risk include those in the adult industry, travel industry, financial services, gambling industry, or sell software downloads. However, each merchant has its own criteria for determining which business is classified as high risk. 

Factors that Contribute to High-Risk Classification 

In general, businesses that have a chargeback rate of 1% or higher of their total transactions can be considered as high risk. Other factors can include processing history, location, and the products that you sell. Some other characteristics of high-risk businesses include: 

  • Operating overseas: If your business sells to US customers but is headquartered elsewhere, this might designate you as high risk
  • Selling products with strict regulations: Selling drug-related products or adult materials might require you to purchase a high-risk merchant account
  • High processing volume: Businesses that have a higher monthly sales volume than average are more likely to be viewed as high risk
  • Questionable sales tactics: Those in the telemarketing business or use multi-level marketing are most likely to be flagged as high risk
  • Large ticket sales: Businesses that sell expensive products, such as jewelry and antiques are often viewed as high risk
  • Poor credit history: Those with little or no credit card processing history are more likely to be viewed as high-risk businesses 

If you meet the qualifications above and are designated as high-risk by your merchant service provider, you still have plenty of choices to work with. By keeping your chargeback rate as low as possible, ensuring your processing is PCI-compliant, you’ll be able to minimize risk. 
Learn more about how to choose the best high-risk merchant processor with our guide.

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