The High-Risk Merchant Account: What You Need to Know

As a small business owner, you may never hear the term “high-risk merchant account” until your company is identified as one. While this label may feel like an unfair judgment against your business, the truth it’s far from it.

Identifying a merchant as “high-risk” simply means that the business has a greater risk for fees and chargebacks. This label is in no way a reflection of how you run your company.

In this article, our knowledgeable experts at Salus Payments will cover:

  • What a high-risk merchant account is
  • The differences between low-risk and high-risk merchant accounts
  • Examples of high-risk businesses
  • Account fees and considerations
  • How to apply for a high-risk merchant account
High-Risk Merchant Account

Table of Contents:

  1. What Is A High-Risk Merchant Account?
  2. How Do High-Risk Merchant Accounts Work?
  3. High-Risk And Low-Risk Accounts: What’s The Difference?
  4. Low-Risk Merchant Accounts
  5. High-Risk Merchant Accounts
  6. Examples of High-Risk Businesses
  7. Fees For High-Risk Accounts
  8. How To Apply For A High-Risk Merchant Account
  9. What To Expect Next
  10. Conclusion

People Also Ask:

Are you familiar with a high-risk merchant?

Businesses that are typically classified as high-risk operate in industries with higher risks of chargebacks and fraud. The two highest-risk accounts are online gaming and adult material. High-risk merchant accounts are necessary for these industries.

How much does a high-risk merchant account cost?

Businesses with high-risk merchant accounts typically pay $100 per month on average. This rate is on top of a standard $500 credit card merchant fee to MasterCard, EACH, and Visa. Sign-up or start-up fees also usually apply.

What Is A High-Risk Merchant Account?

High-risk merchant accounts are payment processing accounts designed for businesses defined to be high-risk by banks.

When a company is high-risk, it’s because they’re more prone to fees and chargebacks based on their:

  • Industry
  • Products
  • Services

As such, businesses with high-risk accounts must often pay higher fees for merchant services. This is for the merchant provider to better protect your company from chargebacks and the possibility of fraud.

How Do High-Risk Merchant Accounts Work?

High-risk merchant accounts work much like traditional merchant accounts.

Both payment processing processes involve the following parties:

  • Merchant (Business)
  • Customer
  • Merchant Services Provider
  • Issuing Bank
  • Payment Gateway
  • Credit Card Network
  • Issuer’s Payment Processor

While payment processing for high-risk merchant accounts is similar to low-risk accounts, businesses considered high-risk must obey and understand additional regulations.

These often include:

  • Two-factor authentication may be necessary to boost identity-checking procedures. Many payment processors choose to use authentication processes that include three or more steps.
  • Payment processing providers can limit the number of high-risk merchant transactions. They often do this monthly.
  • Payment processors can refuse transactions that go over the agreed amount that your business is allowed to receive from customers on a monthly basis.
  • Up to 15% of every transfer made to a high-risk business account can be used as a roll-over reserve. This is typically used to help cover high processing rates, chargebacks, gateways, and limited processing options.

Additionally, it’s up to you to keep track of your transactions by creating order forms for customers when they make purchases from your business.

High-Risk And Low-Risk Accounts: What’s The Difference?

The most significant difference between high-risk and low-risk merchant accounts is the level of risk they represent to your provider.

It’s important to understand this because it will impact rates, fees, processing timeframes, and other factors that you’ll need to meet to qualify.

Low-Risk Merchant Accounts

Not every payment processing provider comes with its own set of guidelines. However, there are universal regulations common for all involved parties.

Common indicators for low-risk merchants typically include (based on compliance’s general evaluation):

  • Zero to very low possible chargeback ratio
  • The operated industry is considered low-risk
  • The operated country of your business is low-risk (the USA, Australia, Japan, Canada)
  • Minimal returns
  • Less than $500 average in credit card transactions

High-Risk Merchant Accounts

The more chargebacks that come with a business, the higher the risk. As such, the primary factors that matter with a high-risk merchant account are processing history and industry reputation.

Our experts at Salus Payments recommend trying to keep your chargeback ratio less than 0.9% for all total transactions.

While characteristics of high-risk merchants vary widely, common factors include:

  • Excessive chargebacks
  • Bad credit card history
  • Businesses operating in high-risk countries
  • Higher than $500 credit card transaction average
  • More than $20,000 monthly sales volume

Examples of High-Risk Businesses

The fact is that merchant providers can consider any business as high-risk. In most cases, being high-risk depends on your industry, what types of services and products you offer, and how you process transactions.

Common examples of high-risk businesses include:

  1. Casinos, Gaming, or Gambling (Online and/or In-Person)
  2. Car-Parts and Repair Shops
  3. Travel Industry
  4. Discount Cell Phone Retailers
  5. Auctions and Antiques
  6. Dating Websites and Services
  7. Modeling and Talent Agencies
  8. Collection Agencies
  9. Real Estate
  10. Social Networking Sites

Fees For High-Risk Accounts

The reality is that high-risk merchant accounts require more funds. There are inevitable costs that you must face, so preparing to pay more in account fees and processing charges is vital.

Higher fees for high-risk accounts were set as the standard many years ago. Today, it’s possible to find providers that offer competitive rates customized to your business.

Look for a company that charges you for the things that make sense, like Salus Payments!

Common fees include:

Rolling reverse – A rolling reserve is a fee that acts as an additional layer of protection for your bank against fraud and chargebacks. Usually, 5-10% of the credit card processing volume is secured depending on your business model. The amount is on hold for about six months and released.

Chargeback fees – Remember that chargeback fees can apply when a customer files for a chargeback. This means the cardholder asks the bank to dispute the charge. It’s the fee that covers the costs of processing a chargeback.

How To Apply For A High-Risk Merchant Account

To apply for a high-risk merchant account, you’ll need to fill out an online application. To accept card payments, you’ll also need to partner with a dependable high-risk provider.

You may be surprised to hear that the application process is simple and relatively short. Once the acquiring bank approves your business, Salus Payments will work with you to get you started accepting and processing credit card payments.

You should have the prepared before applying for a high-risk merchant account:

What To Expect Next

After you apply, risk management experts review your application and credentials thoroughly. These professionals will determine if your business qualifies for a high-risk merchant account. They’ll also verify if your company is on the TMF (terminated merchant file) list.

Your credit card processing history will be reviewed thoroughly based on the acceptable chargeback thresholds. If your processing history contains fraud or a high chargeback ratio, getting a high-risk merchant account may be difficult.


There are many reasons why your business could be considered high risk. But if you set up a high-risk merchant account with the right payment platform, you can expect a simpler experience without the headache!

Are you ready to obtain a high-risk merchant account for your business?

Contact our experts at Salus Payments today to learn more!