High Risk and Low Risk Account Merchant: Know The Difference

Oct 01, 2019

If you have been a business owner for any length of time, you have discovered very quickly the importance of taking either debit or credit cards as a form of payment. 

Although more Americans are carrying less paper dollars on their person, they are still making their everyday purchases in the form of plastic. Since more people are leaving their checks at home, businesses that accept credit and debit card payments are more likely to increase sales versus those that don’t.

In order to process these credit and debit card payments, businesses must have a merchant account.  

What is a Merchant Account?

A merchant account is an account into which you move funds from your customer’s debit or credit card purchases after they have been processed.  Although you don’t have direct access to these funds, they are actually transferred directly into your business banking account. This can take from 1 to 2 days. 

In your merchant account, you will also get credit and debit processing services that can come from a third party or the very organization who has granted you the merchant account.  Other features may include check processing services, online account reporting features, services to make sure your account is PCI Compliant and a lot more.

Are You a High Risk or Low Risk Account Merchant?

Before you can begin researching merchant services providers, you need to ask yourself a few questions about the business you run.

Merchant service providers have developed their own criteria to categorize businesses in terms of their perceived risk.  Based on this criteria, they assign merchants to one of two categories: High Risk and Low Risk. Which do you fall under?

Here are the typical characteristics of a Low Risk Merchant:

  • You accept only one type of currency
  • Your payment page is hosted by the payment service provider
  • Average monthly sales volume is less than $20,000
  • Average credit card transaction is less than $500
  • Products sold include low-risk books, stationery, clothing or household goods
  • Your country is considered low risk (USA, Canada, Western or Northern Europe, Japan or Australia)
  • You utilize 3D Secure to prevent fraud
  • Your returns and payments are greatly minimized

Here are the characteristics of a High Risk Merchant:

  • You accept multiple currencies
  • Average monthly sales volume is more than $20,000
  • Average credit card transaction is more than $500
  • You sell goods and services to countries that are associated with high levels of fraud (anywhere outside the USA, Canada, Western or Northern Europe, Japan or Australia)
  • You have bad credit history
  • You offer recurring or subscription payments
  • You are on the MATCH list due to excessive chargebacks
  • Your main product offerings are high risk software, digital, tickets, seasonal items

Based on the criteria set by the merchant service provider, a High Risk Merchant must deal with higher prices than Low Risk Merchants.

High risk merchant service providers typically charge higher than average fees and have strict contract conditions to mitigate any risk.  Some include rolling reserves in their contract, which means that they hold a percentage of your daily revenue for a set time, returning it when other funds become available.


It’s important to take the time to research merchant service providers thoroughly based on your category. Although it is easy to open a merchant service account, it is also easy to make bad decisions that can cost you thousands of dollars. Look at their features, pricing schedules and contract terms to determine your business needs.

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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