What Determines high Risk Credit Card Processing

When it comes to determining whether or not a company is a high risk in the world of payments, there is no standardized set of standards or criteria. Instead, there exists a wide variety of risk assessment criteria among different payment processors, banks, and payment service providers. Some businesses make it clear that they won’t collaborate with specific sectors, while others are open to partnerships with anyone. When deciding whether or not to work with a certain business, payment processors are typically more selective than merchant account providers. However, the merchant account provider will use its own internal standards to evaluate your application and make a determination when you apply for a merchant account.

Industries That Are Often Considered High Risk

Certain industries are commonly classified as high risk by payment processors. These include accounting and preparation of taxes, adult items or services, automotive accessories and parts, bonds for bail, cigarettes and tobacco products, collections, software for computers, credit repair, dating solutions, debt consolidation, nutrition, and weight loss offerings, online downloads, preparing documents, drop shipping, electronic devices, longer warranties, fantasy sports, banking services, firearms and firearm accessories, free trials, and home furnishings. highly regulated industries such as vape and e-cigarettes, hunting and outdoor equipment, legal services, nonprofit organizations, SEO and SEM services, nutraceuticals and supplements, software as a service (SaaS) companies, multilevel marketing, online gaming and casinos, tasers and stun guns, jet charter, property, mail-order transactions, self-storage, precious metals and coins, web design, cannabis, pawn shops, tech support, travel and vacations, and smoking accessories..

Other Risk Factors to Consider

In addition to specific industries, there are several other risk factors that can make a business need high risk credit card processing services. These factors include conducting international sales, high sales volumes, having little to no business experience, operating in highly regulated industries, high average transaction sizes, processing a large number of card-not-present transactions, being on the MATCH list (Mastercard’s list of disreputable merchants, compiled from data like chargeback rates), having a new or poor credit score, as well as a history of fraud or illegal activity, accepting subscription-style payments, and having long fulfillment time frames.

Need a High Risk Credit Card Processing Account? Here’s What to Do

In order to enhance the probability of discovering an appropriate payment partner for a high-risk merchant account, it is advisable to take into account the following recommended practices:

  1. First, be forthright and truthful in your application. Transparency and clear communication will aid your cause.
  2. Review your cash levels. Financial institutions favor customers that keep between 25 and 50 percent of their monthly card transaction volume in liquid assets.
  3. Prepare the necessary documents. Be ready to share several months of bank statements that demonstrate the flow of cash into and out of your business. A few years’ worth of tax returns may also be required by some financial institutions.
  4. 4. Examine the variables that are under your control. You can’t control the level of risk that payment processors assign to your industry, but you may work to enhance your credit score and cut down on chargebacks, which may help. Consult with your payment provider to explore risk reduction strategies that could potentially lead to better rates.
  5. Communicate with customers clearly. Some chargebacks result from dissatisfied customers rather than fraudulent activity. Taking steps to clarify your return policy, shipping policy, and ensuring easy accessibility for customers seeking issue resolution can help minimize these types of chargebacks.
  6. Be open to learning. Don’t act like you know everything about payments when you don’t; instead, lean on the knowledge of payment processing staff. Ask for their advice on how to best organize your payment methods, and be open to changing anything they suggest.

high risk credit card processing

Finding a High-Risk Merchant Account Service Provider

Because of the broad variety in customer requirements and associated risks, most businesses that deal with high-risk customers offer tailored pricing structures. Publicly available rates and terms are uncommon, and therefore, it’s necessary to schedule consultations with company representatives.

Here are some things to keep in mind as you begin your hunt for a high-risk merchant account provider:

  1. Identify potential payment processors to engage with. It is common practice for processors that cater to specialized sectors to advertise their services in industry-specific publications, online, or through other direct marketing methods to find new consumers. Working with service providers who have experience in your specific field is a good place to start.
  2. Learn about each payment processor’s offerings. Before submitting an application, engage in a conversation with the payment processor to understand their services. Inquire about their experience in your field, the support they provide, the time required to access funds, and whether any reserve requirements exist.
  3. Understand the potential for changing terms. Ask about circumstances that might lead to changes in the agreement, such as increased costs if chargebacks exceed a certain level. Conversely, some payment processors may offer reduced costs if specific thresholds are met.
  4. Consider using multiple payment processors. Using more than one payment processor can provide redundancy and mitigate the risk of service disruptions. By employing a payments orchestration layer, e-commerce businesses can manage payments across multiple processors effectively.

How High-Risk Accounts Differ from Regular Accounts

High-risk accounts come with several key differences compared to regular accounts.

  1. High-risk firms pay more for payment processing. The competitive fees for a standard retail small business account are 2.6% plus 10 cents per transaction, while the fees for a high risk business account are 2.95% plus 25 cents per transaction. Thus, a regular retail shop pays $1.40 for a $50 transaction, while a high-risk merchant pays $1.73. Note that company costs vary.
  2. Second, high-risk account applications take longer. High-risk accounts take days to approve, whereas normal small-business accounts take minutes. High-risk retailers must furnish bank statements and personal credit checks.
  3. High-risk businesses pay more in chargebacks. Businesses must return the original transaction amount and pay $20–$100 chargeback fees.
  4. High-risk accounts require cash reserves. As a security measure, payment processors may hold onto portion of the business’s funds. Capped, rolling, and upfront cash reserve requirements exist.
  5. High-risk firms may have monthly card transaction limits. These limits prevent money amounts from exceeding a particular limit. Additionally, fraud-prevention techniques may be needed of such businesses. High-risk organizations must use advanced fraud detection systems and tougher refund policies to prevent fraudulent transactions and chargebacks.
  6. Not all payment processors or banks work with high-risk enterprises. Many providers exclude high-risk industries and firms due to their high risk and liability. Thus, high-risk merchants may need to use high-risk payment processors or payment facilitators to discover suitable payment processing solutions.

Managing High Risk Credit Card Processing Accounts

You can reduce risk and successfully manage your account if your firm is high-risk:

  1. Choose a payment processor: Look for high-risk payment processors with experience working with your sector. These vendors certainly understand high-risk merchants’ unique needs.
  2. Secure fraud prevention: To prevent fraud, use modern fraud detection systems and tight security. This reduces chargebacks and keeps your payment processor happy.
  3. Chargeback ratios should be monitored constantly and addressed immediately. Excessive chargebacks can lead to penalties, fines, or merchant account cancellation. 
  4. Be honest: Applying for a merchant account or dealing with a payment processor requires precise and transparent business information. Disclose industry hazards and regulations.
  5. Provide good service: Customer service reduces disputes and chargebacks. Resolve customer issues quickly and clearly state your refund and cancellation policy.
  6. Know industry rules: Staying current on rules and compliance standards is crucial in a highly regulated industry. Thus, you can avoid legal issues and maintain a good relationship with your payment processor.

What Is a High-Risk Payment Gateway?

The term “high-risk payment gateway” refers to a certain type of online payment processor. In the context of electronic commerce, it is analogous to a virtual POS terminal or a physical credit card terminal. The payment gateway acts as a conduit between the acquiring and issuing banks, transmitting and receiving information pertaining to financial transactions. It functions primarily as a merchant service that facilitates interaction between financial institutions.

A high-risk payment gateway, in layman’s terms, is a system that allows physical and online businesses to accept credit card payments. It enables customers to submit their credit card information securely, which is then transmitted by the payment gateway from the consumer to the retailer and subsequently between the retailer and the bank. The gateway can process various payment methods, including debit and credit cards, eCheck (ACH), and cryptocurrencies like bitcoin.

Finding the Best High-Risk Payment Gateway

Seeking advice from an e-commerce application service provider is a good idea while looking for the best high-risk payment gateway. This service provider should be able to process credit card and direct payments for any firm, whether it’s an e-commerce site, a physical store, or a combination of the two. Although customers can acquire a payment gateway from a bank, high-risk businesses necessitate specialized providers who comprehend their distinct requirements. Typically, the company offering the high-risk merchant account also serves as the payment processing provider.

How Does a Payment Gateway Work?

Payment transactions through a payment gateway follow the following process:

  1. The customer places an order on an online shop and provides their payment information.
  2. Next, the encrypted data is sent to the merchant’s processor.
  3. The processor then forwards the information to the relevant credit card company.
  4. The transaction is either approved or declined.
  5. If approved, the transaction receives authorization.
  6. Funds become available to the merchant within 24 to 48 hours.

Applying for a High-Risk Payment Gateway

Think about the following when you search for the most suitable high-risk payment gateway to operate your online store:

  1. Differentiate between a high-risk payment gateway and a merchant account. Online payment processing requires both a merchant account and a payment gateway. The merchant account receives funds from customer payments and transfers them to the company’s bank accounts, while the payment gateway authorizes or declines transactions.
  2. Payment Service Providers (PSPs) serve as both high-risk merchant accounts and payment gateways. These providers assist businesses in collecting and managing payments.
  3. Multiple high-risk payment gateway options are available. Consider providers who offer their own gateway solutions.
  4. Depending on the industry, a high-risk payment gateway can be set up quickly. Once the merchant account is established, businesses can integrate the gateway code into their online stores.
  5. Understand the fee structure of the payment provider. Consider factors such as setup fees, transaction costs, and administrative expenses.

Best High-Risk Payment Gateway Integrations and Features

By implementing a payment gateway, businesses can process payments seamlessly with their high-risk merchant accounts. To ensure a seamless payment experience and maximize the benefits of a high-risk payment gateway, look for the following integrations and features:

  1. Timely payment processing: Different providers may have varying processing times, so consider the speed of payments when selecting a gateway.
  2. International payment capabilities: If your business operates globally, verify that the gateway supports international payments and multiple currencies. It should also offer an interface with multiple languages.
  3. Third, the gateway must have strong security measures, such as tokenization and compliance with the PCI DSS level 1 criteria.
  4. Responsive customer support: Choose a payment gateway that offers reliable and accessible customer support to assist with any issues or inquiries.
  5. Local credit card support: If dealing with international payments, ensure that the gateway supports local credit card types specific to your target markets.
  6. Recurring payment options: For businesses with recurring billing needs, the gateway should securely store customer credit card information and enable automated recurring payments.
  7. Integration with existing software: Check if the high-risk payment gateway integrates smoothly with your current billing, shopping cart, and accounting systems. Compatibility with your existing software stack is crucial for streamlined operations.

high risk credit card processing

High-Risk vs. Low-Risk Merchant Accounts

Certain characteristics make a merchant low-risk to payment processors. Typically, low-risk merchants exhibit the following traits:

  1. Low transaction volume, usually less than $20,000 per month.
  2. Average transactions under $500.
  3. Operations primarily in low-risk countries like the U.S., Canada, Japan, Australia, and various European countries.
  4. Transactions conducted in a single currency.
  5. Low or zero chargebacks and a low percentage of returns.
  6. Operate in industries categorized as low-risk.

It’s important to note that a business’s risk status can change as it evolves. Significant growth, expansion into new countries, or a shift in industries can impact the risk assessment. Payment processors may adjust the risk level accordingly or discontinue their services for high-risk merchants, necessitating the search for a new provider.


 It is important to note that high risk credit card processing firms, banks, and service providers determine credit card processing risk differently. High-risk industries include those with subscription-style payments, chargeback history, high transaction sizes, and international sales. Transparency, cash levels, documents, controllable variables, customer communication, and payment processor guidance are essential when applying for this type of account. Due to customized rates and terms, account providers require research and consultation. Managing these types of accounts requires choosing the right payment processor, implementing fraud prevention measures, monitoring chargeback ratios, maintaining transparency, p0roviding good customer service, and staying current on industry rules. Online businesses should consider integrations, security, customer support, and compatibility when choosing a high-risk payment gateway to securely authorize credit card payments. As a business’s risk status changes, understanding high-risk and low-risk merchant accounts is crucial.


Can I get instantly approved for a high-risk merchant account?

Instant approval for these accounts is not possible. Due diligence is necessary to prevent fraud and mitigate risks, so the underwriting process typically takes a few weeks.

How do payment service providers like Square, Stripe, or PayPal deal with high-risk merchants?

Square, Stripe, and PayPal are popular options for high-risk merchants because they have a simpler onboarding process compared to traditional merchant accounts. However, using these payment service providers has downsides. They often charge higher flat rates, lack reliable customer support, and some industries are entirely banned from using them.

Will I need a high-risk payment gateway?

If your business operates in an industry that carries a high level of risk, it is highly probable that you will require a payment gateway specifically designed for high-risk transactions in order to accept online credit card payments. Although payment gateways, in general, are not categorized as high-risk entities themselves, selecting one that incorporates robust security measures plays a vital role in safeguarding your business from fraudulent activities.

Is there a high-risk virtual terminal?

Yes. It is created when a virtual terminal is linked to a high-risk merchant account. Virtual terminals are essential for processing card-not-present transactions, but they come with increased risks. Implementing additional authentication measures is necessary to prevent payment issues and chargebacks.

In the event that I utilize an eCommerce platform, can I secure a high-risk merchant account?

Indeed! Numerous renowned eCommerce platforms such as WooCommerce, Shopify, and BigCommerce all allow seamless integration with high-risk merchant accounts. Although in-house payment services may not be available, you can typically integrate a third-party payment gateway.

Will I need a high-risk merchant account if I have bad credit?

Having bad credit may prevent access to low-risk merchant accounts, but there are options for high-risk merchant accounts even with poor credit. These specialized accounts cater to individuals and businesses with less favorable credit scores, providing access to payment processing services.

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