In a 2021 survey, statistics show that 56% of respondents used a credit card to complete an online transaction in the United States. In order to accept online payments, businesses need to have a merchant account—doing this, however, may not be easy for all businesses. Those considered as high-risk businesses need to work with a high-risk merchant processor and may pay higher account fees.
On average, it can cost an average of $1,800 per year for a high-risk merchant account, in addition to an initial merchant application fee of $100-$300, credit card processing fees, chargeback fees, and other incidental fees. However, this number can be much higher or lower depending on the provider you work with and your industry.
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Often, many high-risk merchant accounts come with long-term contracts that include lots of fine print. They may raise fees on occasion or charge additional fees if you want to switch providers or breach their terms of service. Some of the fees in addition to setup fees and processing fees include:
Typically, payment processors charge around $20-$30 per chargeback for low-risk businesses. Unfortunately, high-risk businesses will usually pay more than this. If a customer chooses to dispute a transaction on their credit or debit card, this can cause trouble.
Those with chargeback ratios higher than 2% can have their accounts terminated by processors, so having chargeback protection can come in handy.
To prevent the loss of sensitive financial information, most high-risk merchant accounts charge a PCI compliance fee. This ensures that merchants and businesses have the proper security to reduce the risk of information theft.
PCI fees are generally charged on a monthly or yearly basis. The amount can vary between providers, but high-risk merchant account fees cost around $120 per year.
Since being categorized as a high-risk merchant can lead to greater risks in payment processing and greater costs as well, it’s important to compare services to find the provider that provides the most value for money.
Read on to learn more about how credit card processing works and what other fees are involved.
Florence Carpenter is passionate about ensuring that the process of opening merchant accounts is as straightforward as possible. She graduated from the University of Michigan with a bachelor’s degree in Marketing.
