When To Use High-Risk Merchant Services

Florence Carpenter

To accept credit cards and other forms of payment, businesses typically need to rely on a merchant provider’s services. However, a high-risk merchant account may be the only option for businesses that have high chargeback rates or operate within certain industries.

Being associated as high risk often carries stricter terms, higher fees, and greater conditions compared to low-risk clients. Some options include overseas merchant accounts or international merchant accounts for those with a large customer base in other countries. 

Why You May Be Labelled High Risk 

Depending on which merchant provider you apply with, you may be considered high risk. Some signs include a history of higher than average refunds and chargebacks, selling items that cost over $500, or businesses in industries that have constantly changing legal regulations.

Other businesses that are usually considered high risk include those with a high volume of recurring payments, such as subscription or membership services. Those with specific merchant category codes might also be viewed as high risk by credit card processing service providers.  

Operating as a High-Risk Merchant   

Those operating as a high-risk merchant tend to have greater financial obstacles to contend with. To prevent chargebacks and fraudulent payments, 3D secure authentication and other online security features can be helpful.

It is also a good idea to improve your credit score and maximize your cash reserves to minimize risk. As a high-risk merchant, it’s also advisable to have a backup merchant account so that you can continue to accept card-based payments in the event of any financial issues. 

Since not all merchant providers work with high-risk businesses, it’s best to do your research and compare options to find the most cost-effective choice for your business. Obtaining a detailed quote and reading your contract carefully can help you make your decision.

To learn more about why e-commerce merchants are considered high risk, read Processing Card’s other guides.

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