The rise of digital payments has led to an increasing number of businesses seeking cost-effective payment processing solutions. However, certain industries are considered high-risk and may struggle to find a payment processor that caters to their needs. In this article, we will explore what constitutes a high-risk merchant account, the factors that determine risk, and how to find a suitable payment processor.

What is a High-Risk Merchant Account?

A high-risk merchant account is designed for businesses that have a higher likelihood of chargebacks, fraud, or other financial risk factors. These businesses require specialized payment processing solutions to accept credit and debit card payments. The definition of "high-risk" varies from one payment processor to another, and there is no central authority that determines the risk factors associated with a business. More at High Risk Merchant Blog

Industries Considered High-Risk

Certain industries are inherently considered high-risk due to their nature. These include CBD (Cannabidiol) products, e-cigarettes, vape products, stun guns, credit repair services, multi-level marketing, adult products/services, pawnshops, dietary supplements, SEO services, and tech support. Additionally, factors such as being a new business, having poor credit records or low credit scores, operating in controversial or highly regulated industries, relying heavily on international sales, and previous placements on the MATCH list by payment processors can also contribute to a business being labeled as high-risk.

Differences Between High-Risk and Regular Merchant Accounts

High-risk merchant accounts differ from regular accounts in several ways. These include a longer application process, higher payment processing fees, cash reserve requirements, volume caps in credit card processing, higher chargeback fees, and additional requirements based on the business type. Payment processors may also impose stricter guidelines and regulations on high-risk businesses to mitigate their risk.

Finding a Suitable Payment Processor

If you're a high-risk business, finding a suitable payment processor can be challenging. It's essential to research and list down payment processors that cater to your industry. Consider factors such as the processors' experience in your industry, processing fees, equipment provided, customer support, and support for diverse payment methods. Some payment processors that specialize in high-risk merchant accounts include Durango Merchant Services, Payment Cloud, Payline Data, Host Merchant Services, and Soar Payments.

Tips for High-Risk Businesses

To increase your chances of finding a suitable payment processor, maintain healthy cash levels, reduce chargebacks, disclose all relevant information during the application process, keep your financial documents ready, and adhere to the guidelines set by your payment processor. Being transparent and open about your business operations and financial history can also help to build trust with payment processors.

In conclusion, high-risk merchant accounts are designed for businesses that have a higher likelihood of chargebacks, fraud, or other financial risk factors. Certain industries are inherently considered high-risk, and payment processors may impose stricter guidelines and regulations on these businesses. By understanding the differences between high-risk and regular merchant accounts and finding a suitable payment processor, high-risk businesses can increase their chances of success.