What is a High Risk Merchant Account? Complete Guide for 2024

Dennis Pedersen

Dennis Pedersen

Operating in high risk sectors? You probably understand the importance of having a high risk merchant account to ensure seamless payment processing. But what is a high risk merchant account? Is it essential for your business? How does it differ from low risk regular accounts? And which payment providers are considered top choices for merchant accounts?

Find all the answers in this comprehensive guide. Learn everything you need to know about high risk merchant accounts – what they are, how they work, which businesses are considered high risk, and the leading payment providers that offer high risk merchant accounts

What is a high risk merchant account? 

A high risk merchant account is a payment processing service for businesses that banks view as riskier than regular accounts. This is due to factors such as a high number of chargebacks, financial instability, a history of fraud, a poor credit rating, or other reasons. 

Businesses classified as high-risk often have to pay higher fees and undergo additional scrutiny to be able to access merchant services.

Moreover if a high-risk business has a history of many refunds and chargebacks, a merchant bank may place a rolling reserve policy on their account. This reserve is an amount of money that will cover the possibility of chargebacks.

How does a high risk merchant account work? 

It’s not uncommon for high risk merchant service providers to have strict restrictions on industries and products, leaving businesses vulnerable to account suspensions, frozen funds, and termination. 

When an account is terminated, it can result in a business being added to the MATCH list, a database of high risk merchants managed by Mastercard. This poses additional challenges for high risk merchants who already encounter difficulties in securing a payment provider.

However, there are merchant services providers that specialize in servicing high risk industries and can provide accounts that allow merchants to run their businesses without the fear of termination.

These high risk merchant accounts are specifically designed to support payment processing for businesses that are considered high risk. 

Every payment processor has a credit policy that sets the criteria for the industries they can support. The good news is that high risk merchants can now easily handle their payment processing needs with advanced capabilities, just by setting up a high risk merchant account.

High risk vs low-risk: What’s the difference? 

The distinction between high risk and low-risk merchants is determined by specific characteristics and the assessment made by the account provider regarding the business. 

Low-risk businesses usually deal with a single currency, sell low-risk items like clothing, household goods, books, etc., have a well-established operation, and experience very few or no chargebacks. 

On the other hand, high risk businesses accept multiple currencies, have a negative reputation due to the nature of their services or products (such as adult entertainment, CBD, gambling, debt collectors, etc.), possess a weak credit rating and financial stability, and encounter a high frequency of chargebacks and fraud.

👉 Check out this detailed article to gain more insights into the distinction between high risk vs low risk merchant accounts.

Business types considered high risk merchant accounts 

While there is no definitive list, there are several sectors that are often considered high risk industries, which include: 

Keep in mind that, in order to obtain a merchant account, your business will undergo a risk assessment by the bank or financial institution. Financial providers assess the risk of working with high risk merchants by looking at the enterprise and sector it operates in, and allocating it to a specific merchant category code (MCC). 

For the enterprise, high risk factors include the number of years in business, financial stability, creditworthiness of directors and owners, income channel, and length of time between payment and delivery. 

The business’s sector is analyzed for credit risk, regulatory risk, and reputational risk. 

It’s not uncommon for traditional banks to reject account applications from high risk businesses. However, by opting for a high risk merchant account you can overcome the challenges and keep your operations running smoothly.

Payment processing as a high risk business

High risk businesses with unique needs can consider using payment service providers (PSPs), like PayPal, Stripe, Venmo, or Square, as a third party to facilitate payment processing. But it’s important to note that PSPs combine multiple merchants under one account instead of providing each merchant with their own account. 

They often come with per-transaction fees that can accumulate quickly, and have their own risk protocols in place that may result in freezing or retaining funds if suspicious activity is detected. 

Well-established businesses with a high number of transactions or a large volume of sales may benefit from choosing a traditional merchant account instead of a PSP, as it can result in a lower rate and more cost-effective payments. 

A merchant account provides a more personalized and tailored payment processing solution, as the provider can understand the business and its operations.


What are the pros & cons of high risk payment processing? 

Securing a high risk payment processing solution usually involves a more comprehensive evaluation of your business before getting a merchant account.

Let’s look at some of the pros and cons when it comes to high risk payment processing:

Pros of High Risk Payment Processing

  • More payment options available – high risk payment providers allow for a greater choice of payment options, providing more flexibility to accept payments from customers. 
  • Recurring payments made easy – high risk merchants can easily collect recurring payments, which is especially beneficial for subscription-based businesses. 
  • Handling high sales volumes – high risk merchants can handle high sales volumes, maximizing revenue potential during peak periods of demand. 
  • Simplified International transactions – high risk merchants can also accept international transactions, opening up opportunities to expand business globally.


Cons of High Risk Payment Processing

  • Complex account fees structure – Understanding payment processing fees can be challenging as there are various fees associated with it, including setup fees, per-transaction processing fees, monthly maintenance fees, credit card processing fees, and chargeback fees.
  • Higher setup and transaction fees – Setting up a high risk merchant account may involve higher setup fees and usually have higher transaction fees, ranging from 4% to 10%, compared to the 1-2% fee for low-risk accounts.
  • Longer settlement periods – To reduce the risk of chargebacks, high risk accounts may have a longer settlement period, which can be up to a week compared to the usual 3 days.
  • Rolling reserves policy – A portion of your card transactions can be held as a reserve. Merchant account providers use this policy to mitigate potential losses from chargebacks.


How to find the best high risk merchant provider?

Choosing the right provider can make a significant difference when it comes to resolving issues promptly and conducting business smoothly. Here are a few tips when making a selection:


5 aspects to consider when choosing a payment processing provider

  1. System Integration Capabilities: Ensure that the processor’s platform can integrate with your current business systems. 
  2. Specialization and industry experience: Select a processor that has experience and is specialized in serving similar high risk industries.
  3. Powerful security features: Look for processors that offer strong security features to protect against fraud and chargebacks.
  4. Reliable Customer Service – It’s crucial to select a merchant account provider that offers continuous and dependable customer service. 
  5. Competitive Pricing: Although high risk accounts often have higher fees, it’s still important to compare pricing among different processors.


To help you get started, explore these top 3 high risk merchant account providers in the following section.


Top 3 high risk merchant account providers in 2023

1. PayFasto

PayFasto is a specialized payment service provider that caters to the needs of merchants in high risk industries. It offers a convenient and reliable solution for handling electronic payments, which includes various payment options like credit and debit cards, as well as local payment methods. 

With the user-friendly checkout page and advanced payment gateway, accepting payments from your customers is made simple. The platform also offers secure payment processing, real-time transaction monitoring, and 24/7 support. 

Offering personalized solutions, PayFasto enables you to effectively handle your finances, minimize transaction fees, and expedite the processing of transactions. Additionally, a user-friendly and comprehensive CMS empowers you to effortlessly manage all your payments through a unified platform.

👉 Make sure to check out the reviews here or have a look at PayFasto’s payment gateway services.

PayFasto - high risk merchant account instant approval

2. Durango Merchant Services 

Durango Merchant Services specializes in payment services for high risk merchants. They offer international and multi-currency merchant accounts, e-check processing, and chargeback and fraud protection. 

They also provide ecommerce gateway services, wireless mobile payment options, and cryptocurrency processing. However, they do not offer age-verification tools,  which may not be suitable for high risk businesses that sell age-restricted products.

3. SMB Global 

SMB Global Payments provides customized payment processing solutions for high risk businesses globally. They have strong domestic banking relationships and offer offshore merchant accounts with lenient guidelines and higher processing volume limits. 

They serve various industries, including high risk merchants, and have partnerships with affiliate and ISO programs. They also offer a payment gateway that integrates with websites and mobile devices.

Why is PayFasto the best option for high risk businesses?  

PayFasto provides merchants with a seamless payment processing solution, allowing you to focus on their core business operations while enjoying a hassle-free payment processing experience.

  1. Various Payment Options – Our merchant account offers a wide range of payment methods, including credit cards, debit cards, digital wallets, and more. 
  2. Advanced Integration Capabilities – Our payment gateway has advanced integration models and state-of-the-art API plugins, ensuring a streamlined payment solution that is adaptable to business growth. 
  3. Secure Transactions – Equipped with Chargeback Reporting systems and Fraud Prevention facilities, our payment gateway ensures transaction security and boosts customer confidence. 
  4. Dependable 24/7 Customer Support – Our customer support team is available 24/7 to assist with any inquiries or concerns. 
  5. Comprehensive Fraud Monitoring and Prevention – Our payment gateway provides a comprehensive fraud monitoring and prevention system to minimize transaction fraud and protect against DDoS attacks.

Start Accepting Online Payments for Your High Risk Business

We understand your unique needs and offer tailor-made payment processing solutions. Allow us to manage your payment processing, so that you can seamlessly operate your business and gain success.

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Dennis Pedersen
CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.
Dennis Pedersen
CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.


CEO & Founder of PayFasto. I have achieved a long time dream of helping advertisers with getting the processing setup they always wanted! This is something i wanted when i had my own offers.