What is High Risk Credit Card Processing?

Sep 05, 2012

High Risk Credit Card Processing

High risk merchant services and payment processing– if your business operates in an industry that most banks consider ‘high risk,’ this is an issue which is likely to occupy a lot of your time. But what exactly is it, how does it differ from ‘normal’ credit card processing, and what industries are most likely to be in need of a high risk processing solution? We’ll answer all these questions throughout the course of this article.

What It Is…

First of all, let’s define high risk processing. This simply refers to processing payments for businesses that most processing providers consider to be high risk – it does not mean the actual payment processing system itself contains big risks. You can set up a payment gateway which is just as secure as that used by any ‘low risk’ business. The ‘risk’ is simply related to the nature of the business, and is determined by things like that rate of chargebacks in an industry.

The Pitfalls of High Risk Credit Card Processing

Industries where businesses typically see a lot of chargebacks tend to be riskier for banks to provide credit card processing to.

The main problem with most high risk credit card processing accounts is higher fees. Because you’re seen as a high risk business, you’re likely to be charged extra in order to cover the higher risk. It’s the same principle as higher insurance premiums for older people and people with pre-existing medical conditions: most banks consider your business more likely to cause problems for them when it comes to credit card processing, so they will either turn down your application or make it more expensive for you to set up and maintain a credit card processing system.

High Risk Industries

So what qualifies as a ‘high risk’ business? The guidelines for risk levels differ from one provider to another, but most banks will classify you as ‘high risk’ if you operate in any of the following industries:

  • adult websites
  • online pharmacies
  • collection agencies
  • credit repair
  • travel agents
  • credit repair agencies
  • diet supplement stores
  • online casinos
  • online marketing companies
  • online subscription services
  • online information product sellers (ebooks, seminars, etc.)
  •  escort agencies

However, it’s not just the industry which determines whether you’ll qualify as high risk. Sometimes, making changes to your terms and conditions or privacy policy documents can be enough to move you out of the ‘high risk’ category and make your business more attractive to traditional credit card processing providers like banks. But in many cases, if you operate in one of the industries above you won’t have much luck getting a good deal on credit card processing from most banks.

That doesn’t mean you have to settle for paying higher fees, though. eMerchantBroker.com specializes in helping high risk businesses get the best deals on merchant accounts, so you can start processing credit card payments without piling unnecessary strains on your cash flow.

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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