Why Are High-Risk Merchant Services Different?

High-risk merchants mean that the processing companies in question view you as a higher risk. There are numerous reasons why this may be the case, but no matter what that reason is, it’s essential to know your options and how to move on from this situation if possible.

Higher processing fees

The reason for high processing fees is simple: high-risk merchants tend to have higher fraud rates. A business’s riskier, the more likely it will be used for fraudulent transactions. Thus, the cost of processing their payments must be offset by increased fees to protect against fraud and chargebacks.

High risk merchant accounts services generally have lower interchange rates than standard credit card rates because these businesses tend to have higher risk profiles and are more likely to commit fraud or chargebacks. However, this does not mean that all high-risk merchants pay higher fees than other types of businesses; instead, it means that if you want a lower interchange rate on your account, then you need to make sure your business doesn’t fall into one of these categories (or at least ensure you do everything possible within those categories).

Higher chargeback rates

A chargeback occurs when a customer disputes a transaction. When this happens, the merchant must pay the card processor for the marketing and fees. Chargeback rates vary by industry, with high-risk merchants experiencing higher chargeback rates than low-risk ones. For example, as of 2018, the average chargeback rate for all merchants is 0.78%, but it’s 1.4% for high-risk merchants—a difference that can significantly negatively impact your business’s bottom line and profitability.

Longer application process

If you’re applying for a high-risk merchant account, your application may take longer to process because of the additional paperwork and documentation needed. It is necessary because of the higher risk associated with high-risk merchants—but it does mean that getting approved for a merchant account can take some time. Your business will also undergo more scrutiny than other businesses’ applications do. You’ll likely be asked questions about how many employees work for you or if you have ever been in trouble with the law.

Reserve requirement

You may be wondering what the reserve requirement is. The reserve requirement is a percentage of your monthly sales that you must always keep in your account. This money can be used for customer refunds, chargebacks, and other issues that arise with your business.

The Reserve Requirement can also be waived if you have enough collateral.

Volume limits

As a high-risk merchant, you’ll face a few challenges. One of those challenges is that your transaction limits will be lower than those of low-risk merchants. The higher the risk involved in your business model, the lower your limit. If you’re a high-risk merchant, it’s likely to take longer to get approved for a card processing account than someone with a small or medium-sized business (or even an individual).

There are exceptions to this rule: some processors set their minimum transaction amount at $1, while others require up to $500 daily. In addition, depending on which processor you choose, there may be no limit on the number of transactions per day—but watch out! If they don’t have any limitations and allow unlimited transactions, they might charge extra fees based on monthly usage or other factors (like how many employees work at each location).

Locations of your customers (International sales)

A high-risk merchant account is not just a regular payment processing service. It’s an intricate system with many moving parts that need to work together for everything to run smoothly. And one of the most important aspects is location tracking.

If you are selling your products or services internationally, then it’s essential that you know who your customers are and where they are located. It will help you understand how they prefer to pay, what currency they like, and whether or not there’s a need for unique payment methods (like cash on delivery).

You must choose a payment processing company that specializes in working with high-risk merchants. You must be sure that the company has a good track record of working with high-risk merchants, and they should also have a good customer service team available to help you 24/7. If you decide to use an online payment processor, they must provide different options to choose what works best for your business.

How To Choose a Reputable High-Risk Merchant Account Provider

When choosing a reputable high-risk merchant account provider, you should consider the following:

  • Check reviews. Check its reviews if you are looking for a high-risk merchant account provider. You can use the internet or ask your business colleagues whom they recommend.
  • Check credentials. When choosing a reputable high-risk merchant account provider, check their credentials and make sure that they are licensed and registered in your state or country, as well as having an established history of providing quality service to their clients. This will help ensure that you get access to quality customer service when needed, which is essential because some companies have poor customer service, which could cause issues if something goes wrong with your account later down the line (for example).

Agents That Can Help You Find the Right High-Risk Merchant Account

To protect your business, you need a high-risk merchant account. But what is a high-risk merchant account? First, it’s essential to know that high-risk accounts are treated differently from standard ones. High-risk companies often have higher processing fees and higher minimums than traditional accounts. But if you’re dealing with a product or service that has the potential to be abused by customers (like alcohol or tobacco), you’ll need to get one of these special accounts to accept credit cards at all.

The best way to find an agent who can help you find the proper high-risk merchant account is through referrals from people who have used them before and were satisfied with their service—and who can recommend them specifically!


It is a crucial reason why high-risk merchant services are unsuitable for you as a small business. If you want to start accepting credit card payments and make it more convenient for your customers, consider using an alternative payment processor that offers reasonable rates and doesn’t require an application process.

Maria Colombo
Maria Colombo
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