Emily Moore

Being labelled “high-risk” can be a struggle, but in the case of high-risk merchant accounts, it doesn’t have to be a detriment to your business.


Download our free payment processing guide for high-risk merchants.

A high-risk merchant account works just like an ordinary service, allowing you to accept Visa and MasterCard payments, along with other payment options. Often, a high-risk company will be unable to acquire a merchant account with a regular company, due to fears of fraud or a high volume of chargebacks. However, there are providers out there that will gladly take you on as a client.

Why You May Be “High Risk”

You might have trouble getting approved for a merchant account because you operate in a “high-risk” industry or fall under one of any number of reasons why a provider would classify your business as high-risk, such as fraud, bad credit, or a history of chargeback.

In addition, because one provider may consider you high risk doesn’t necessarily mean that another one would similarly deem you the same. In fact, if the provider you apply to specializes in high-risk merchant services, then you may have already won the battle.

The following are a few industries that have higher incidences of chargebacks and that many merchant services deem as high risk.

  1. Automotive merchants;
  2. Cannabis dispensaries;
  3. Debt management agencies;
  4. International trade;
  5. Real estate; and
  6. Travel agencies.

Simply put, if your business operates in a high realm of uncertainty, it is considered high risk. Thus, finding a financial institution that is willing to deal with you can be difficult. You need a merchant services provider that prioritizes your business’ unique needs.

Pricing and Payout Expectations When You’re High Risk

The rates that you can expect as a high-risk business are likely to be higher than average. High-risk merchants often have to deal with unsatisfactory terms and high rates and, as a high-risk business, you may have no other options.

Depending on the provider, some high-risk businesses can obtain a rate of three or four percent of the transaction amount, but others may receive as high as 15 percent or even more. In regards to payout, it, again, depends on the high-risk provider. Certain businesses may receive payouts daily, while others receive it twice a week or on a weekly basis.

What’s in Reserve?

In regards to high-risk merchant accounts, the reserve is a specified percentage of the merchant’s sales retained by the processor. This percentage is kept in escrow for the purpose of risk mitigation. This exact percentage is calculated during a business’ application process with a high-risk merchant service. It’s also partially determined as a share of the expected revenue from your monthly transactions.

There are a few kinds of reserves that you may have access to:

  • Rolling Reserve;
  • Capped Reserve; and
  • Up-Front Reserve.

Each reserve holds a percentage amount of money either for a specific amount of time (rolling), until a fixed amount is reached (capped), or for a specific amount at the start of the agreement (up-front).

This reserve is also usually used in cases of chargebacks. If a transaction clears, the funds in the merchant account reserve are secure. However, if a transaction is disputed by the cardholder, the reserve could be used to repay the consumer. Generally speaking, a reserve is also required for businesses that process card-not-present transactions or have both high average transactions and high monthly processing volumes.

These are only a few things to consider when signing up for a high-risk merchant account. So, make sure you ask the right questions when shopping for a high-risk merchant services provider.

High-Risk Merchants: How to Get Reliable Payment Processing to Grow Your Business

Emily Moore

With seven years of experience in the industry, Emily is the Merchant Boarding and Underwriting Specialist for BNA Smart Payment Systems. She also has experience in credit risk management, fraud and chargeback analysis, and in-depth knowledge of chargeback mitigation. At BNA, she is responsible for reviewing, investigating, and resolving irregular transactions; identifying and analyzing trends; exchanging knowledge of trends with peers and supervisors; and keeping records of past fraudulent activities. With a solid understanding of current fraud trends and software applications, Emily has a methodical approach to problem solving, great attention to detail, and the ability to recognize patterns. As a fitness enthusiast, Emily enjoys CrossFit and playing sports to keep active. She also loves the outdoors and spending time up north.
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