High-Risk Credit Card Processing: The Best Service Providers of 2025
Ever feel like you’re paying more for your credit card processing than other merchants? There might be a reason for that.
In the world of credit card processing, there’s “high risk,” and then there's everybody else. Certain factors get you slapped with a “high-risk” label. That will bring fun perks like higher fees, more restrictions, and limited provider options.
Some merchants offering subscriptions or dealing with high-ticket items may be considered high-risk just because of their business model. Others may find themselves stuck in the high-risk trap for a different reason (usually excessive chargebacks).
In this post, we’re discussing the pros and cons of high-risk credit processing. We’ll also hook you up with a list of top-rated high-risk payment processors of 2025, which should help you find the best fit for your business.
Recommended reading
- Chargeback Thresholds: How Many is Too Many Chargebacks?
- What is the Amex Fraud Full Recourse Program?
- High-Risk Merchant Accounts: The Best Providers of 2025
- How the Terminated Merchant File Can Affect Your Business
- Merchant Account Reserves: What You Need to Know in 2025
- Visa Dispute Monitoring Program: What is the VDMP?
Learn more about high-risk accounts
What Makes a Business “High Risk?”
Being branded a high-risk merchant doesn’t mean your business is untrustworthy, nor that customers should shy away from you. What it does mean is that the entities who proved credit card processing expect to see a higher rate of disputes filed against your store. The reasons could vary, including:
- Your industry or vertical
- The types of products or services you sell
- You business model (subscription-based, for example)
- Average dollar amount of sales
- The country or regions where you do business
Any of these factors can make your business more prone to chargebacks. On the other hand, merchants with a history of excessive chargebacks can also be deemed high risk, regardless of product vertical or business type. Their chargebacks can be due to anything from internal policy errors to friendly fraud.
Even things like your business’s credit score or how long you have been in business can also have an impact. To the processor, the source of your potential future chargebacks is immaterial. Risk is solely estimated based on how many chargebacks they expect you to have.
See a partial list of high-risk verticals
Pros & Cons of High-Risk Credit Card Processing
We’re not saying that high-risk processing is desirable, per se. Becoming a high-risk merchant shouldn’t be a business goal or anything.
What we are saying is that using a high-risk processor can be a viable path forward. In some cases, it may be the only option available, but in other situations, it can be a highly profitable way to conduct business. That’s why many eCommerce merchants actually prefer it over conventional payment processing.
How do you know which is best for you? Let’s look at some of the pros and cons of working with high-risk credit card processing companies. This will give you a better impression of what to expect:
Pro
Global Expansion
Standard processors can restrain or prohibit merchants from transacting in multiple currencies. They may also restrict you from selling to customers outside of regions like the United States or Western Europe.
The earning potential tied to international sales can make high-risk credit card processing seem more appealing.
Con
Higher Service Costs
All processors work on the assumption that high-risk clients will inevitably produce more chargebacks. They may require higher setup charges and impose larger monthly fees to offset this risk. The ongoing cost of processing will also be more than what merchants would otherwise pay.
These excessive charges can make high-risk processing less appealing.
Pro
Billing Flexibility
Processors can limit the amount of revenue standard merchants generate via subscription billing. They can also set limits on the types of products or restrict high-ticket sales.
In contrast, high-risk processors can allow for increased flexibility in billing practices.
Con
Merchant Account Reserves
Many high-risk payment processors require a merchant account reserve. This is a non-interest-bearing savings account used by the acquiring bank as a type of insurance against chargebacks.
Merchants won't be able to access the money in reserve until 180 days after the initial transaction. This delay can make high-risk business untenable, even without chargebacks.
Pro
More Business Types
There is a long list of products and services that credit card networks see as too risky for standard merchants. Many travel, telemarketing, gaming, tobacco, and pharmacy businesses will be prevented from working with a traditional credit card processor.
With a high-risk merchant account, however, you can sell products in just about any merchant category code (MCC).
Con
Reputational Damage
Working with a high-risk payment processor may be your best option, but you should use caution when deciding to go this route. If your business is labeled "high-risk" due to excessive chargeback issuances, you may be unable to engage with traditional payment service providers in the future.
Merchants who use a high-risk processor can often maintain a higher chargeback ratio without risking the loss of their processing. This can be appealing to merchants who have a higher-than-average chargeback liability.
Pro
Higher Chargeback Threshold
Standard merchants must keep their chargeback issuances within a narrow, acceptable range. Otherwise, they could lose their ability to process payments, and can end up on the MATCH List.
The earning potential tied to international sales can make high-risk credit card processing seem more appealing.
Con
Higher Chargeback Fees
A high-risk payment processor may be willing to work with merchants with high chargeback rates, but this willingness comes at a cost. The processor will usually assess higher fees for each individual dispute.
These fees add up quickly and are a major disadvantage of high-risk processing.
How Do You Qualify for High-Risk Processing?
As a merchant, you can sign up for a high-risk credit card processing account much like you sign up for standard, low-risk processing services. To qualify for high-risk processing, you need to:
#1 | Know the Risk Level of Your Business
Your risk level is determined by a number of different factors. A service provider will look at the industry you operate in, where you’re located, who your customers are, your processing volume, and your chargeback ratio, among other factors. These will all be considered in aggregate.
#2 | Compile Documentation For Your Business
Processors may request detailed information about your business, including information about how you operate, along with copies of your business licenses and financial statements. Your provider will also scrutinize your chargeback history and record of compliance with industry regulations.
#3 | Look for a Service Provider
Consider how long each service provider has been in business, and how they’re rated by other high-risk merchants. Also consider how much it costs to set up an account with them, how flexible their contract terms are, and how strict their underwriting procedures are.
#4 | Put a Chargeback Mitigation Plan in Place
High-risk merchants are more exposed to fraud. As a high-risk merchant, you should develop a multi-pronged chargeback management strategy that addresses fraud prevention, billing error reduction, and representment. This will make you a more enticing candidate for service providers.
#5 | Submit Your Application
After settling on a processor, you should submit an application. Include any supporting documents that may strengthen your chance at approval. Application review times vary from provider to provider. If your application is approved, you should carefully review your agreement before signing.
#6 | Maintain a Low Chargeback Ratio
Working with a high-risk processor means you have more leeway in terms of chargebacks. But, you should still strive to keep your chargeback volume as low as possible. Regularly review chargeback data for patterns and trends. Be proactive about identifying and addressing areas for improvement.
How to Choose the Right High-Risk Credit Card Processor
The right credit card processor can make or break your business. Before settling on a high-risk processor, consider the vendor’s:
Selecting the right service provider requires careful consideration. We’ve compiled a list of some of the best service providers of 2025 to help you start your search. Click here to view the list.
Avoid High-Risk Processing by Controlling Chargebacks
All of the above is great if you want to work with a high-risk processor. For some merchants, it is simply their only option. That means they’re stuck with all the baggage of high risk, while enjoying few of the benefits.
If there is an upside to that, it may be that high-risk providers are also less likely to close your account because of excessive chargebacks. That’s especially important if the bulk of your chargebacks are from avoidable sources; you have more leeway to identify the problem and get those chargebacks under control.
Unfortunately, a lot of merchants don’t know where their disputes are coming from, and wouldn’t know how to mitigate the risk, anyway. If your chargeback rate is threatening to push you into high-risk territory, we can suggest a great alternative: chargeback prevention.
Chargebacks911® helps sellers in all merchant category codes, sales models, and product verticals to avoid excess chargebacks. Our platform also enables high-risk merchants to recoup revenue that would otherwise be lost to fraudulent chargebacks.
Contact us today for a free, no-obligation chargeback analysis and learn exactly how much you could be saving.
FAQs
How much does a high risk payment processor charge?
Individual rates depend on the processor, but most high-risk merchants will pay 0.5% to 1% higher than low-risk businesses. The average high-risk processing rates range from 2% to 10% or more per transaction. Providers may also charge a $10 to $50 monthly fee for high-risk accounts, and rates could fluctuate depending on the perceived risk level.
What are the disadvantages of a high-risk merchant account?
Downsides of using a high-risk merchant account include higher processing costs, required account holds or rolling reserves, and increased compliance and regulatory restrictions. Chargebacks and customer disputes may be more common in high-risk businesses, and the choices for providers will be limited.
What makes a merchant high-risk?
The high-risk label can come from a number of factors, including high transaction volume, high average ticket size, or low credit score. You may also have a historically high chargeback ratio or high potential for credit card fraud. Limited business operating history could also be a factor.
What is high-risk credit card processing?
High-risk credit card processing services are provided by specialized financial institutions that cater to merchants who operate in a risky industry, or who have a history of excessive chargebacks. High-risk credit card processing services cost more than standard services and may require merchants to establish account reserves.
How much does a high-risk merchant account cost?
Fees for high-risk merchant accounts vary, but processing fees typically range from 2.5% to more than 5% of transaction volume and are usually up to 1 percentage points higher than processing fees associated with standard, low-risk merchant accounts. Additional costs include monthly fees and higher-than-standard chargeback fees.
What is considered a high-risk transaction?
A transaction is deemed “high risk” when it carries an elevated risk of fraud or loss. For example, a transaction that has a high likelihood of turning into a chargeback may be considered high-risk. Typically, international transactions, high dollar volume purchases, cash advances, card-not-present transactions, and payments for certain goods or services (e.g. e-cigarettes, poker chips, adult products, credit repair services, etc.) are considered high risk.
What is Level 3 credit card processing?
Level 3 credit card processing allows large companies that transact with other businesses or the government to save on credit card processing fees. To qualify for Level 3 processing, merchants must provide their payment processors with extra data, including invoice numbers, product codes, tax IDs, line-item breakdowns of goods and services provided, and transaction-specific data.
What is the average merchant processing fee?
On average, merchant processing fees range between 1.5% to 3.5% of a transaction. Processing rates are usually structured as a percentage plus a flat rate, so an exact fee may be 2.9% of the transaction value plus $0.30 per transaction.
