High Risk Merchant Accounts
Understanding High Risk Merchants
High Risk Merchants
- Startup business with minimal or no history in credit card processing
- Business within an industry that sees a higher than average rate of chargebacks/returns
- Business offering products or services that are high cost
- Business offering subscription-based services or products
- Business that has already had a terminated merchant account
- Business with poor credit history or history of bankruptcy
- Business with a high volume of sales
- Business attempting to work within a specific country or region that is considered high risk
The Process of Evaluating Risk
- Previous merchant accounts have been terminated and the merchant is registered through the MATCH List database
- The business is too new and does not have sufficient payment processing background
- The industry that the merchant belongs to has a higher than average change of chargebacks or is classified high risk by card networks by MCC
- The merchant uses a subscription billing model for the sale of products
- The merchant markets and sells products or services to countries that are considered high-risk
- The merchant sells custom made products
- The merchant has higher than average tickets as an average of all tickets
- The merchant offers delivery of goods as delayed or future
- The merchant sells products that are considered a reputational risk for the acquirer
High Risk Merchant Accounts
Even with all of this information, however, and the added risk and drawbacks associated with high-risk merchant accounts, there are some benefits to processing in this manner. For example, these individuals are more likely to have money in reserve and are also likely to pay more in chargeback fees and transaction processing fees. This is considered compensation for the potential problems that could occur as a result of the issues discussed above. But they generally also have a higher offering for chargeback-to-transaction ratio.
Is Your Business High Risk Labeled?
Let’s say you’re interested in getting a merchant account for your business and decide to fill out an application for one as a traditional account. Perhaps you then were rejected and you weren’t really sure why. The likely answer is that you are considered high risk, but you may not even have known that you were considered high risk. You could be labeled this way if:
Evaluate Safety and Security
Benefits of Working with a Team
Increased Rates and Fees
You’ll find yourself paying more in fees and all rates when it comes to having a high risk account, and because of the high risk nature of your business you’ll have less flexibility to negotiate with. Low risk businesses can negotiate about contract terms, but for high risk businesses this is more difficult, especially when it comes to monthly charges and fees. But you can work with us to find new options that will help your business in whatever way possible to mitigate these fees and more.
Why is There High Risk?
Offshore Merchant Accounts
High Risk Account
What Makes Your Merchant Account a High Risk Account?
Do You See the Payment Card?
Are Large Chargebacks Considered Normal?
Where are You and Who Do You Serve?
What Else Could Contribute to Your Risk?
Financials and Account History
You want to make sure that you’re managing your accounts properly so that you don’t get listed as a high risk account in the future. You’ll want to make sure you get the type of account that your business needs but nothing more. And make sure that you are following along with any requirements that your service provider puts on you.
Length of Business History
If your business has been around for a while you’re going to be considered less of a risk. On the other hand, if you’re brand new you’re going to be considered a much higher risk. Keep sticking it out and you may be able to get yourself out of the category of high risk over time.
Designated High Risk
You could be considered high risk because you’re on a TMF or MTACH list for things like non-payment, fraud, high dollar custom products, high quantities of international transactions or processing misconduct. There are a lot of different things that could contribute to you being added to this type of list, so make sure you’re watching out for each of them and mitigating them when possible.
What’s the Rate?
When it comes to high risk merchant accounts you’ll often find a high setup fee or other fees associated with it. The problem is that the higher the risk you’re considered the higher the fees you could end up seeing. You’ll generally have fees that start around 3.5% and go up from there. In fact, you could see rates that are even higher than 10% if you’re considered one of the highest risk business types.
This includes businesses with other types of offshore merchant service providers or those who have extremely risky industries that they’re working in. It’s even possible for your rate to go above that 10% and for you to see additional charges for processing.