All There is to Learn About High-Risk Merchant Accounts

Sep 13, 2022

A high-risk account is one typically used by businesses that are considered high-risk. This can include businesses in industries that are known for having a high rate of chargebacks or fraud or businesses that are new and don’t have a long history of credit card processing.

Who Needs a High-Risk Merchant Account?

Several businesses may need a high-risk merchant account to process credit cards. Some common industries considered high risk include:

  • Online gaming
  • Adult entertainment
  • Telemarketing
  • Travel
  • Timeshares
  • Nutraceuticals
  • High-ticket items

The Pros of a High-Risk Account

There are troves of benefits that come along with having a high-risk merchant account. Some of the most notable benefits include:

1. Increased approval rates 

Because high-risk businesses are considered to be a higher risk for chargebacks and fraud, so they often have difficulty getting approved for a traditional merchant account. However, a high-risk merchant account has a much higher chance of approval.

2. Lower fees

High-risk merchant accounts typically come with higher fees than traditional merchant accounts. However, these fees are often lower than the fees charged by third-party processors.

3. More payment options 

High-risk merchant accounts offer a wider range of payment options than traditional merchant accounts. This includes the ability to accept international payments and payments from high-risk customers.

What are the Drawbacks of a High-Risk Merchant Account?

There are some downsides to owning high-risk merchant accounts. These include:

1. Higher fees: 

As mentioned above, high-risk merchant accounts typically come with higher fees than traditional merchant accounts. This is because high-risk businesses are considered to be at a higher risk for chargebacks and fraud.

2. Higher reserve requirements: 

High-risk merchant accounts often have higher reserve requirements than traditional merchant accounts. You may need to keep a lump sum in your account to cover any potential chargebacks or fraud.

3. More stringent requirements:

 High-risk merchant accounts often have more stringent requirements than traditional merchant accounts. This includes having a higher credit score and a long credit card processing history.

Qualities to Look for in a High-Risk Account Provider?

You should keep a few things in mind when looking for a high-risk merchant account provider. Some of the most important ones include:

  • experience working with high-risk businesses
  • competitive rates and fees
  • a wide range of payment options
  • flexible terms and conditions

What Do You Need to Apply for a High-Risk Merchant Account?

When you’re ready to apply for a high-risk merchant account, there are a few things you’ll need to have to get started. These include:

  • Your business information: You’ll need to provide your business name, address, and contact information.
  • Your business tax ID number
  • Your processing history: 
  • Your bank statements
  • Your ID: 

You’ll also need a good credit score to qualify for a high-risk merchant account.

The Bottom line

If you are a retailer who needs a high-risk merchant account, there are a few things to keep in mind. However, a high-risk merchant account can be a great way to accept credit card payments if you are a business that is considered high risk by the credit card companies.

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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