What Factors Makes A Merchant Account High-Risk?


If you’re a business owner looking to accept credit card payments, you’ve likely come across the term “high-risk merchant account.” But what exactly does it mean, and why might your business be considered high-risk? In this article, we will explore the factors that can make a merchant account high-risk, and what you can do to navigate this challenging landscape.

  • 1. Industry Type

Some industries are inherently riskier than others. For example, businesses involved in online gambling, adult entertainment, or pharmaceuticals often fall into the high-risk category. This is because these industries are more susceptible to chargebacks, legal issues, and regulatory challenges.

  • 2. Poor Credit History

Just like when you apply for a personal loan, your credit history can impact your merchant account status. If you, as a business owner, have a history of financial troubles, late payments, or bankruptcies, payment processors may classify your business as high-risk.

  • 3. High Chargeback Rate

Chargebacks occur when a customer disputes a charge and requests a refund from their credit card company. If your business has a high rate of chargebacks, it’s a red flag for payment processors. A high chargeback rate suggests potential issues with customer satisfaction, fraud, or product quality.

  • 4. International Sales

Expanding your business globally is exciting, but it can also increase the risk associated with your merchant account. International transactions often involve currency conversion, different regulations, and increased fraud potential. All these factors can contribute to a high-risk classification.

  • 5. High Ticket Sales

Businesses that deal with high-value transactions, such as luxury goods or expensive services, are more likely to be considered high-risk. Larger transactions can attract fraudsters looking for a big payout, making payment processors more cautious.

  • 6. Subscription-Based Businesses

Subscription-based models, such as software as a service (SaaS) or monthly box subscriptions, often experience higher chargeback rates. Customers may forget about their subscriptions, not recognize a recurring charge, or simply change their minds. These factors can make subscription-based businesses high-risk.

  • 7. Legal and Regulatory Concerns

If your business operates in a legally gray area or deals with products or services that have strict regulations, payment processors may view it as high-risk. For instance, businesses in the cannabis or tobacco industry face legal challenges and may have difficulty securing a merchant account.

  • 8. New Businesses

Startups and newly established businesses often face difficulty obtaining a merchant account, primarily due to their lack of a financial track record. Payment processors may be skeptical of their ability to handle transactions and manage potential risks.

  • 9. Payment Processing History

If your business previously had a merchant account and had problems like excessive chargebacks or fraudulent activity, this history can negatively affect your new account application. Payment processors may perceive a pattern of risk associated with your business.

  • 10. Poorly Managed E-commerce Websites

The security and functionality of your e-commerce website matter. If your site is poorly maintained, lacks encryption, or has a history of security breaches, payment processors may label your business as high risk due to the increased likelihood of data theft and fraud.

Certainly, let’s add a section to address the next steps after your business has been designated as “high-risk”:

What Factors Makes A Merchant Account High-Risk?

Your Business Has Been Designated “HighRisk.” What Now?

If your business has been categorized as high risk by payment processors, it’s essential to take the right steps to navigate this challenging status. Don’t be discouraged; there are solutions available to help you continue accepting credit card payments. Here’s what you can do:

1. Contact High-Risk Merchant Account Specialists:

Your first and most crucial step is to get in touch with high-risk merchant account specialists. These experts understand the unique challenges that high-risk businesses face and can offer tailored solutions to meet your specific needs. They will guide you through the application process, help you set up your merchant account, and provide ongoing support.

2. Discuss Your Options:

High risk merchant account providers have a range of options designed to meet the needs of businesses like yours. They can help you choose the right payment processing solutions that align with your business model and industry.

3. Customized Risk Mitigation Strategies:

High-risk specialists can work with you to develop custom risk mitigation strategies. These strategies may include fraud prevention measures, chargeback management, and compliance with industry regulations.

4. Excellent Customer Support:

Look for high risk merchant account providers that offer excellent customer support. Effective communication and prompt assistance can make a significant difference in reducing chargebacks and maintaining trust with your customers.

5. Transparent Fees and Terms:

It’s essential to understand the fees and terms associated with your high-risk merchant account. Reputable providers will be transparent about their pricing and any additional charges.

6. Stay Compliant:

Ensure your business complies with all relevant laws and regulations. Staying on the right side of the law is critical for long-term success.

7. Continuous Improvement:

Regularly monitor your chargeback rate and customer satisfaction. Use this information to identify areas where your business can improve and take action accordingly.

By taking these steps, you can overcome the challenges associated with a high risk designation and continue to accept credit card payments.

High-risk merchant account specialists are there to help you every step of the way, providing the expertise and support you need to thrive in your industry.

Remember that every high-risk business is unique, so it’s crucial to work with a payment processor that can provide customized solutions to meet your specific needs. If you’re ready to explore high risk merchant account options and take control of your payment processing, feel free to contact us today. Our team of experts is here to assist you and ensure your business can continue to thrive, even in a high-risk environment.


While being classified as a high-risk merchant account may pose challenges, it’s not an insurmountable obstacle. By addressing the factors that contribute to this status, implementing risk mitigation strategies, and maintaining transparency in your business operations, you can increase your chances of securing a merchant account and continue to grow your business. Remember that there are payment processors and experts who specialize in helping high-risk businesses navigate these challenges, so don’t hesitate to seek their guidance.

Comments are closed.