Five Things About High Risk Merchants And Credit Card Processing

Jun 24, 2020

When it comes to accepting credit and debit cards online, you will need a merchant account provider to act as a mediator to work with the merchant, the banks, as well as the credit card networks. 

Most merchant account providers in the payments industry limit their work to “low-risk merchants” due to their lower risk for chargebacks and, overall, a safer investment. However, if you are a high risk merchant, it is important to know that you and your business will face certain scrutiny. If the merchant account providers determine that you are indeed a high risk merchant, you will be facing higher than average fees, longer contracts, or simply rejected a merchant account. 

What Is A High Risk Merchant?

If the business or industry you are currently in faces a lot of chargebacks, then the higher the risk you pose to merchant account providers. Providers will be looking at two things in your business background: your processing history and the industry reputation. Most providers recommend that businesses keep their chargeback ratio to lower than 0.9% of total transactions. 

What Is A High Risk Merchant Account?

A high risk merchant account is an account for payment processing that is available for businesses that are considered high risk for banks. Since a high risk business has the potential for experiencing a high number of chargebacks, merchant providers typically charge higher fees to mitigate the risk they undertake. In order to further protect themselves, a bank could decide to place a “rolling reserve” on the account. The rolling reserve is essentially money set aside to cover any chargebacks or fraud. 

Five Key Benefits Of Working With A High Risk Merchant Provider

If you are a high risk merchant, the great news is that you don’t have to worry about being left out of obtaining a merchant account. On the contrary, there are many merchant account providers that specialize in working exclusively with high risk merchants.  Want to know more about the benefits of working with a high risk merchant provider? Take a look below:

  • Decreased risk of account termination: The provider is well aware of the risks involved. If there is ever a chargeback or a fraudulent transaction is detected, they have the security measures to address it. They would never terminate the account. 
  • Sell internationally: High risk processors not only will allow merchants to have Card-Not-Present transactions (CNP), but they can also transact in multiple currencies, and even sell to countries outside the U.S., Canada, Western/Northern Europe, Japan, and Australia. 
  • Alleviate the credit burden: Merchant account providers give you a credit when they issue funds from your credit transactions. If a customer were to dispute this purchase and pursue a chargeback, the provider then will grant the refund instantly while the chargeback is being examined. Essentially, the provider is placing the “credit burden” upon themselves.
  • Supporting the growth of your business: Working with a high risk merchant provider opens the doors to potentially earning more revenue, while low risk merchant providers put caps or limits on the amount generated via credit cards. Some of the limitations typical of low risk providers include: no recurring payments, can’t process more than $20,000 per month, or credit card transactions can’t exceed $500.
  • Robust security: High risk merchant providers use the latest detection techniques during the transaction process to verify the legitimacy of the credit cards used. This way, the merchant, the merchant provider, and the customer are protected. 

Final Words

Being categorized as a high risk merchant does not mean the end of your business. Although finding a reliable and reputable provider will take some time and research, once you do secure one, your potential for growth magnifies. 

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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