Complete Guide to High Risk Merchant Account Providers in USA

Complete Guide to High Risk Merchant Account Providers in USA

Get to know the need of your business so that so can avail the best payment facility. If you are looking for a Merchant Account Service Provider in the USA then

What is a high-risk merchant account?

A high-risk merchant account is a business account or merchant account that allows the business to accept credit cards though they are considered risky by the banks and credit card processors. The industries that possess this account are Adult Industry, Travel, Forex trading business, Multilevel Marketing business. High-Risk is the term that is used by the acquiring banks to signify industries or merchants that are involved with the higher financial risk.

Who needs a high-risk merchant account?

If you can match your business with any of the below-listed conditions, then it is suitable for you’re the High-risk Merchant Account Providers in the USA services.

  • Your bank doesn’t want to associate with your account due to your credit score or your company financials.
  • Your business is getting higher-chargeback’s falling for your business. If you are a low-risk business that is more prone to chargebacks, they certainly need to consider a high-risk merchant account.
  • If your industry is utilizing subscription-based services then there is the wide prospect that you providing free trial services for your membership-based users. When free-trial-based users forget to cancel the subscription before the trial ends and gets charged for the first month, they often issue a chargeback for the business.
  • Your business or industry has a reputation of being at risk, and then it could also damage the reputation of the bank. Industries such as gambling, adult entertainment, Casino merchants make banks a little nervous about how their conservative customers will see them.
  • Your business is providing the “future deliverable” products. Hotel rooms, event management, plane tickets, and reservation-based items.
  • You are having a poor history with other merchant accounts because you have been dropped, labeled as high-risk and other problems with your processor.
  • You are selling the high-priced commodity or product. Or your business is providing subscription-based services.
  • You are running your business from another country other than the USA such as Canada, European Union, Japan, and Singapore.
  • Your business is listed in the Terminated Merchant File or MasterCard Alert to Control High-risk merchant list. If you previously had a business and have been listed on one of these lists then your next business is considered to be risky.
  • You have been in the business for a short time. The longer you are in the business, you are likely to become less risky, but takes a little bit of time to get there.

What are the differences between low-risk and high-risk merchant accounts?

Here are some of the attributes from both the low-risk and high-risk merchant account.

Low-Risk Merchant Account High-Risk Merchant Account
If your business is getting an average sale of less than $50 You have a high-value of commodity or product for sale.
You are having less than $20k/month in revenue. Your business is the generation of revenue of more than $20k/month.
Your business is rarely accepting the card, not present transactions. Your business is frequently accepting cards, not present transactions.
The business involves a low chargeback ratio. You are having a high chargeback ratio.
Your business is categorized as a low-risk industry. Your business is categorized as the high-risk industry
Your business has good credit. Your credit score is not good
Your business is having little to no fraud transactions. Your businesses are having a higher number of fraudulent transactions.
Your company has financial stability. Your company is financially not stable.
It’s been a long time you are having the business. It’s not been quite a long time for your business.

High-risk merchant account fees

Setup Fees

Initially, you need to pay the setup fees whether you are a high-risk merchant or a low-risk merchant. You need to pay the cost to set up the merchant account facility. Though, high-risk merchants need to pay extra than the traditional merchants.

Early Termination Fee

You pay this fee when you are setting up the business account, but if you terminate the services you have already made the payment.

Discount fee

The discount fee has simply two models associated with it.

First, we will take MDR. Merchant Discount Rate (MDR)is simply calculated based on the percentage of your turnover. It is one of the traditional methods to forecast the expected processing rate.

While the other model is the Interchange Plus pricing model which is completely transparent which reflects how much the processor is making off you as profit.

Authorization Fees

Whenever a transaction is initiated there is an authorized fee to validate that transaction. If the card information is authenticated then the issuer bank allows the transaction to process and the transaction enters the settlement phase. If the transaction fails for any reason this fee is still charged even as the declined transaction.

Settlement Fee

This is the cost that is charged for the approved transactions. In addition to the previously discussed transactions fee.

Chargeback fee

You need to pay this fee when you are hit with the chargebacks. And also you get charged with them as soon as the disputed chargeback is filed. It is always best to prevent the dispute in the first place, fight your chargeback and recover the lost revenue.

Penalty Fees

You are liable to pay the fee if you violate the payment processing contract. For example- If are following the guidelines with the PCI DSS compliant and are using an EMV compliant processing machine you could be hit with non-compliance fees.

How do I apply for a high-risk merchant account?

The merchant with varying needs requires different payment solutions for their business.

A merchant classified as a high-risk business has distinguished needs from the merchant who is classified as the standard risk. So depending on the nature of the business, the requirements vary. Now financial institutions don’t provide the flexibility to merchants that are associating with higher risk hence they don’t easily provide the payment gateway facility to merchants. Even though the merchant can get the required gateway from the dedicated service provider. Certain documents need to be submitted at the time of applying for the payment gateway services. These documents are:-

  • Government authorized ID card such as Driving License
  • 3 months of recent processing history
  • 3 months of recent bank statement
  • A void cheque

The service provider will allow you to have payment processing facilities within 5 to 7 business working days. Once you submit the required documents to them.

The pros and cons of a high-risk merchant account


While being in a High-Risk business can cost you more but it also has various other perks related to it.

  • Companies that are in potential losses or having bad credit still has the flexibility to process the credit cards and accept payment, which can help recover the payment and get back to higher profitability.
  • There is more protection from fraud and chargeback since the banks and financial institutions have labeled them as such they tend to take more precautions to protect themselves from a chargeback.
  • Low-risk merchant processors don’t have the flexibility to get in touch with every sphere of the business.
  • When your business hot hit with a higher chargeback then your merchant account is less likely to be banned.
  • You are more likely to earn more since you are in a high-risk industry that means you are in an industry that involves high-profit margins.
  • A reserve account can be really helpful against the chargeback. But it may have certainly been the pain to have one since you need to wait for at least 180 days after account closure before you can get your money.
  • You are more likely to have flexibility with the global market, which means you can get your product or services anywhere in the world.

Cons of High-Risk Merchant Accounts

  • You are required to pay more for the merchant fee and services. You usually pay a fee higher than the traditional processing fee.
  • You have got reserve account with the capacity of having 50% of the approved monthly volume. Based on your issuing bank and your payment processor, your rolling reserve can be on hold up to 180 days after the post merchant account closure.

What to consider when looking for a high-risk merchant account

Certain things need to be considered while looking for a high-risk merchant account facility.

Support: The merchant needs to have support from the service provider. In case if something goes wrong you can rely on your partner.

Prices: Prices may vary from provider to provider. Ensure that you are not paying any extra or hidden costs.

Professionalism: When getting in touch with the payment company, you need to find out for how long they have been in this business.

Get to know the need of your business so that so can avail the best payment facility. If you are looking for a Merchant Account Service Provider in the USA then eMerchantPro is providing a unique payment solution to the merchants when it comes to high-risk business.