When looking for a high-risk merchant account you can expect different pricing and contract terms, but our recommended providers are fair, honest, and transparent.
51 comments Updated on: Apr 8, 2022
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High-risk merchant account
The ability to accept credit cards is a necessity for most businesses these days. While finding the right merchant account provider is a challenge for any business, it’s even harder if you’re a high-risk merchant. That’s where high-risk merchant accounts come into play.
This article discusses why a business might be considered high-risk, what high-risk credit card processing is, and how best to evaluate merchant services providers that cater to high-risk businesses. We’ll also profile the seven high-risk merchant processors that deliver the best service for the most reasonable price.
If you’re not sure whether your business is considered high-risk or if you’re not sure how to evaluate high-risk merchant account providers, read on!
What Is A High-Risk Merchant Account?
A high-risk merchant account is a merchant account for businesses that pose a high risk of fraud and chargebacks by the processor. This assessment may be based on the nature of the business, the owner’s personal credit and business history, and other factors.
Every processor makes its own high-risk determinations, so a business might be deemed high-risk by one processor but not by another.
Why High-Risk Merchant Services Are Different Than Traditional Merchant Accounts
Naturally, having your businesses labeled “high-risk” is frustrating. While certain business types (adult entertainment, gambling, bankruptcy law firms, etc.) nearly always get the designation, simply having poor personal credit or high average ticket sales can do it as well. See our article on running a high-risk business for a complete list of the business types typically considered high-risk, along with other factors that might get your business that designation.
If a processor declines your processing application because it considers you a high-risk merchant, don’t panic. Though you won’t be accepted by most of the big names in the industry, you can still find a processor that will work with you. However, you’ll pay higher processing rates and account fees, and you’ll usually be stuck with a long-term contract and an early termination fee. In some cases, you might also have to put up a rolling reserve.
Don’t despair, though — the existence of countless high-risk businesses demonstrates that you can indeed run a successful one. As for high-risk processors, many are shady and exploitative, but there are several honest providers offering quality services as well. We’re here to highlight those providers for you.
Increased fraud protection
High-risk processors are, by necessity, experts in risk mitigation. While this comes at a cost, your businesses will nonetheless enjoy these benefits with a quality, high-risk provider.
How To Choose A Reputable High-Risk Payment Processor
If you’ve been identified as a high-risk merchant or if you suspect you might be one, following these tips should help you find a merchant account that accepts your business and meets your needs:
Check The Processor’s Accepted Business Types: While a processor might be a high-risk specialist, that doesn’t necessarily mean it serves all high-risk business types. For instance, some high-risk providers will accept cannabis merchants, while others will not.
Look For A Processor That Offers Load Balancing: With load balancing, you can spread your transactions across multiple merchant accounts, which are integrated into a single payment gateway. This carries multiple advantages. For one thing, if one of the accounts drops you, you’ll still have the others to rely on. What’s more, with multiple accounts, you’ll be able to process more on a monthly basis, and your chargeback risk will be reduced.
Read Your Contract Carefully: As most high-risk merchant account providers work with multiple processors, they tend not to list their rates and fees online, as these can vary depending on the merchant account (or accounts) you get matched with. Accordingly, pay close attention to the rates you’ll be charged, and make sure you understand any extra fees. Also, while you’re not likely to get approved for interchange-plus pricing or a month-to-month contract, it doesn’t hurt to ask.
The 7 Best High-Risk Merchant Account Providers
The best high-risk merchant account providers have several things in common, including honest sales practices, a transparent onboarding process, personalized customer service, and equitable contract terms. Rates and fees aren’t as low as most low-risk providers offer, but they will be reasonable.
With the above criteria in mind, let’s look at seven of our recommended high-risk merchant account providers.
No publicly disclosed pricing
Payment Cloud specializes in placing high-risk businesses, relying on a network of third-party processors and acquiring banks to get you approved for an account. You’ll need to obtain a pricing quote from the company to find out what it can offer you, but merchants’ feedback indicates that its fees and rates are quite reasonable. Best of all, PaymentCloud does the extra work required to accept a high-risk account without charging you any application or account setup fees.
For retail merchants, the company now provides a “free” EMV-compliant credit card terminal with each account — it’s free so long as you return it if you close your account or switch providers. PaymentCloud also offers eCommerce merchants access to either Authorize.Net or one of several alternative third-party payment gateways. A free virtual terminal is also available with each account. While its lineup of products and services isn’t as robust as some other providers, it offers all the essentials you’ll need for a small or medium-sized business.
PaymentCloud enjoys a great online reputation, with both our readers and merchants on other sites giving the company a positive endorsement. Low-risk providers such as Dharma Merchant Services and Stripe Payments routinely refer high-risk applicants to PaymentCloud. Recommendations from such highly regarded providers carry a lot of weight with us.
Early termination fee charged for “free” equipment
National Processing is mainly known for its excellent low-risk payment processing services, pairing transparency and low rates with access to the full line of Clover terminals and POS systems. National Processing does, however, also offer high-risk accounts.
National Processing will work with its network of financial institutions to place high-risk merchants, including those in the categories of subscription services, high-volume sales, firearms, and tobacco/vape-related businesses. High-risk merchants will have access to most of the same features National Processing offers to lower-risk merchants, including terminals, mobile payment processing, eCommerce support, and chargeback prevention tools.
$99 account setup fee
High-risk specialist Easy Pay Direct offers its proprietary EPD Gateway as its primary product. It also provides full-service merchant accounts for both high-risk and non-high-risk merchants. As always, high-risk merchants will pay higher processing rates and account fees. However, the additional expense is entirely reasonable under the circumstances.