High-Risk Credit Card ProcessingNot Ideal… but Sometimes it’s the Only Option

High-Risk Credit Card Processing: The Best Service Providers of 2024

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 2024, which should help you find the best fit for your business.

What is High-Risk Credit Card Processing?

High-Risk Credit Card Processing

[noun]/hī • risk • kre • dət • kard • prä • ses • iNG/

High-risk credit card processing is a subset of merchant payment processing services, targeted at merchants considered “high risk” by conventional banks. The processor will generally allow for greater risk exposure in exchange for higher fees.

Merchant processing is inherently risky. But, merchants that are viewed as being more susceptible to chargebacks are flagged as being high risk.

It could be due to the type of product or service being sold, or the average dollar amount for monthly sales. It could also be the regions or countries in which you do business. Any of these factors could make you more susceptible to fraud or abuse, as well as chargebacks resulting from that activity.

As a merchant, you'll ultimately pay the price for chargebacks. Processors and banks, though, are also at risk. In fact, the average chargeback will cost your bank $26 per incident due to processing costs and fees assessed by the card networks. This adds up over time; banks and processors could be open to millions of dollars in potential losses each year.

Providers of high-risk credit card processing services are willing to take on that added risk. They’ll let you take on greater risk exposure than a bank or processor would typically allow. But, as we’ll see in the next section, this freedom comes at a cost.

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 and 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:

The Best High-Risk Credit Card Payment Processors

So by this point, you should have an understanding of what high-risk processing is, including some of the pros and cons. The thing is, there are dozens of high-risk credit card processing services out there. Where do you even start to look?

Not to worry; we’ve got your back. We’ve already done the work of compiling some of our “best of the best” high-risk credit card processors of 2024 below (we’re not here to play favorites; the list is arranged in alphabetical order):

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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.