Top 10 High-Risk Merchant Account Industries

Aug 12, 2020

Some of the typical reasons why underwriters could flag your business as high risk could be the following: your business belongs to a highly regulated industry, processing CNP or card-not-present transactions, high incidences of fraud and chargebacks, and reputational risk according to banks, just to name a few. 

Top 10 High Risk Merchant Account Industries

Below is a list of the top 10 biggest high risk merchant account industries. Also included are some valuable tips to decrease the risk associated with the online payment process.

  • Firearms: There is great controversy over gun ownership, regulation, and safety in the U.S. and therefore banks are a bit leery to take on gun merchants.

Tip: Your best bet is to find a gun-friendly merchant service provider who knows the ins and outs of the gun industry and federal, state, and local gun laws. 

  • Adult Entertainment: Despite this clearly lucrative industry, most financial institutions will not serve any adult entertainment businesses. The most common reason is that they refuse to take on the reputational risk. 

Tip: Consider diving into your research to find or get recommendations for a merchant service provider that specializes in the adult industry.

  • Tobacco/Vape/e-Cig: With rigorous regulation, taxes, age restrictions, and history of fraud, many financial institutions are still giving this industry the cold shoulder. 

Tip: The right payment service provider will be extremely knowledgeable about every state’s rules and regulations concerning tobacco. 

  • Liquor/Hard Alcohol: The trickiest part of this industry is managing customer satisfaction, sales, while staying compliant with all laws and regulations. 

Tip: Get a payment processor who specializes in the tobacco industry and is an expert in the tobacco laws and regulations.

  • Nutraceuticals: This industry is known for its use of recurring billing which inevitably leads to chargebacks. 

Tip: Partnering up with the right payment processor will guide you into providing disclaimers for all your products so that they comply with state and federal laws. 

  • Retail Pharmacies: Online pharmacies typically fall into the high risk merchant category due to stringent drug laws dealing with authenticity, safety, and category. 

Tip: The key to finding the right processor is to ensure they offer you the best payment solutions that are suitable for your business and offer risk management.

  • Auction Websites: Unfortunately, the prevalence of scammers running illegal businesses has tarnished the reputation of honest online auction businesses. 

Tip: Online auction businesses can still secure a payment processor by demonstrating good credit scores and a stable income. 

  • Large Ticket Size ($2,500+): The very nature of selling luxury items with heavy price tags exposes your business to chargebacks. 

Tip: Find a payment processor that can provide you with a customized payment solution, but also banks willing to take on the risks in your industry.

  • Multi-Level Marketing: Despite this booming industry, MLMs are well-known for their risks, including: high chargebacks, legal risks, and unpredictable growth.

Tip: Seek out a payment provider who specializes in MLMs and is equipped with a payment solution that is safe, secure, and offers chargeback mitigation. 

  • Biz Ops(Business Opportunities): This industry sells courses to help people generate income online and it typically uses recurring billing. However, they are known to have excessive chargebacks. 

Tip:  This can be easily rectified by building a solid reputation and a good credit record. Refrain from making any type of “outrageous claims”. A reputable payments provider that specializes in MLMs can assist you with all this as well as chargeback mitigation. 

Final Words:

These are just some of the most well-known and largest high risk industries that are always seeking a solid merchant account provider. Knowing the industry well can be a catalyst to finding the right merchant account provider that will help your business process payments, protect your customers, and your business.

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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