5 Reasons Why A High-risk Merchant Account Is Essential

Nov 30, 2021

If you are a high-risk merchant, chances are you may have been turned away by traditional banks when applying for a merchant account.  Your particular business may have been categorized as high-risk due to having higher incidences of fraud and chargebacks. 

But in order for your business to remain solvent, you must be able to process credit and debit card transactions. This is where seeking a high-risk merchant account would prove greatly beneficial. 

High-Risk Merchant Accounts Are Different

It is no surprise that having a high-risk business exposes merchant account providers to considerable risk. That is why high-risk merchant accounts can seem to have a lot of downsides attached to them. Bottom line? Be prepared to pay more. What is standard in the industry for high-risk merchant accounts is the following:

  • Higher payment processing fees – A standard payment processing fee for a traditional, small business account could be 0.3% on top of the interchange rate. However, for high-risk merchant accounts, you could be looking at 1.5% on top of the exchange rate. 
  • Cash reserve requirements – The payment processor might implement any number of methods to hold on to the business’s funds as a “hedge”. For example, in the “Upfront Reserve” method, the merchant must send the process a certain amount that will be held in reserve. In some instances, the payment processor will hold onto all completed transactions until the amount agreed upon has been met. 
  • A lengthier application process –  Where a standard, the small business account can take but a few minutes to be granted approval on their application, a high-risk merchant account could take several days for approval. 
  • Higher chargeback fees –  Not only do high-risk businesses have a higher incidence of fraud, but they would also need to refund the original transaction amount, plus pay a chargeback fee that can range from $20 to $100 per incident. 

The Top 5 Reasons Why Having A High-Risk Merchant Account Is Crucial

The aforementioned features of a high-risk merchant account should not dissuade you from opening one up. On the contrary, it should empower you to move forward, especially since the advantages greatly outweigh the disadvantages. 

1. Higher chargeback protection

Where most traditional payment processors will shut you down if you exceed the chargeback limit, high-risk merchant account providers are not as keen to pull the plug on your business. These providers are fully-equipped to bear the brunt of these chargebacks. However, it is still prudent to keep the chargeback threshold on the lower end. 

2. Customization and flexibility

High-risk merchants have the privilege of processing recurring payments as well as the ability to offer a wide variety of goods and services. Bottom line, high-risk merchants can process more payments and maintain a higher volume of monthly payments. 

3. Global coverage

As a high-risk merchant, you are able to expand your business on a worldwide scale. This is because you can accept a variety of currencies from low-risk countries. There are no limitations and restrictions characteristic of low-risk merchant accounts. 

4. Higher level of security and fraud protection

Since there is a higher incidence of fraud to be expected, processors are equipped with the latest and most robust security and anti-fraud tools on the market. The comprehensive level of monitoring also protects all parties involved in the transaction process (the payment processor, the merchant, and the cardholder).

5. No volume caps

High-risk merchants can transact without fear as there is no target volume restriction per month. With low-risk merchant account providers, they are subject to a “monthly target volume.”

Being High-Risk, No Longer A Barrier

High-risk merchants no longer have to fear traditional banks turning them away. In fact, high-risk industries continue to grow, opening the door for new high-risk merchant account providers to support more merchants on their journey. 


Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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