High-Risk Credit Card Processing: The Best Service Providers of 2022
Being designated “high-risk” for the purpose of credit card processing isn’t great.
High-risk merchants can face higher fees, more restrictions, and have limited options in terms of which companies are willing to work with them. “So,” you might be wondering, “what do I do now?”
The first thing you should know is that being forced to operate in the high-risk space isn’t the end of the world. In fact, for some merchants, the benefits of high-risk credit card processing might overshadow the potential costs.
In this article, we’ll discuss the pros and cons of high-risk credit processing. We’ll also hook you up with a list of the top-rated high-risk payment processors of 2022, which should help you start your search.
Recommended reading
- Chargeback Thresholds: How Many is Too Many Chargebacks?
- High-Risk Merchant Accounts: The Best Providers of 2024
- What is a High-Risk Business? Why Does it Matter?
- How the Terminated Merchant File Can Affect Your Business
- Merchant Account Reserves: What You Need to Know in 2024
- Visa Dispute Monitoring Program: What is the VDMP?
What is High-Risk Credit Card Processing?
- High-Risk Credit Card Processor
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 tied to fraud and chargebacks in exchange for higher fees.
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There are multiple factors that can make merchant processing riskier than what’s considered “normal.” If we drill down, though, we see that the primary danger is the increased risk posed by chargebacks.
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 will ultimately pay the price for chargebacks. However, processors and banks have risks, too. 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.
Entities that offer high-risk credit card processing are willing to take on that added risk. They will 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.
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, however, is that conducting payments with the help of a high-risk processor can be a viable path forward. In some cases, this can even be a highly-profitable option. That’s why many eCommerce merchants actually prefer it over conventional payment processing.
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.
High-risk business models have a lot of profit potential but they are not right for everyone.
🗸 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.
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.
☒ 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.
The Best High-Risk Credit Card Payment Processors
We’ve covered what high-risk processors are. We looked at some of the pros and cons of working with high-risk credit card processing services.
Where should your search start if you need help from one of these service providers, though?
Not to worry. We’ve already done the work of compiling some of our “best of the best” service providers for the high-risk space. Check out our “Best High-Risk Processors of 2022” list below:
Payline
Description: Payline has assisted over 25,000 businesses in the US for more than a decade. They pride themselves on transparency; in fact, they were the first company to display merchant processing fees directly on their website. The strength of their success has allowed them to form powerful partnerships and create optimal solutions for businesses looking to process payments.
Verticals & Product Focus: businesses with long delivery times, credit & debt relief, medical marijuana, retail cannabis, tobacco/vape, travel (to name a few)
Pricing: Payline uses an “interchange plus pricing” plan due to its transparency. Customers can take advantage of the wholesale rates set forth by the card brands. Payline then adds a small service fee above that.
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PaymentCloud
Description: PaymentCloud offers high-risk merchants competitive rates, reliable service, and easy set-up. The company handles advanced gateway setup with custom fraud filters set individually for each merchant depending on their needs. They also handle migration of cardholder data from popular aggregators like Stripe and Braintree, and help with eCommerce gateway integration on popular CMS platforms. They also provide a range of merchant-friendly perks, including a dedicated rep for the life of the account, coaching on how to avoid chargebacks, diagnostics that break down the sales-to-delivery process to see where common issues arise, and help developing plans to effectively communicate with cardholders.
Verticals/Product Focus: CBD oil, firearms & ammunition, adult entertainment, credit repair, bad credit, vape/E-cigarettes, airlines
Pricing: eCommerce rates of 0 .50% + $0.25 per transaction, plus a $15 monthly fee
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PayKings
Description: PayKings is an industry leader in helping get high-risk merchant accounts approved fast. With low rates and custom for small businesses or large corporations, PayKings offer affordable merchant services, online credit card payment processing, and multiple other services to help merchants get sustainable payment processing in high risk industries.. All offerings can be seamlessly integrated with the merchant’s existing platform.
Verticals & Product Focus: PayKings specializes in providing high-risk merchant accounts. They help businesses in unique industries such as adult entertainment, CBD, credit repair, firearms, hemp, nutraceuticals, travel, vape, and more than a dozen other verticals.
Pricing: PayKings provides customized pricing for each merchant individually. They work directly with merchants to negotiate the lowest rate possible. On average, merchants pay from 1.5% - 4%, depending on their volume and vertical.
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Soar Payments
Description: Soar Payments offers credit card processing, eCheck, and ACH solutions to a wide range of merchants, but specializes in serving those considered to be high-risk or hard to place. Soar Payments prides itself on exceptional customer service (Soar Payments agents are actually available on the phone to discuss merchant's processing needs), competitive and transparent pricing, all with an easy application process.
Verticals & Product Focus: antiques & collectibles, credit repair, debt consolidation, e-cig/vape, moving & storage, nutraceuticals, precious metals, web design
Pricing: Soar Payments tailors their pricing to fit the needs of individual merchants. General options include interchange plus pricing, or qualified discount rates ranging from 1.5% to 4%, depending on the vertical and merchant.
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Fasto
Description: Fasto provides an "all-in-one" solution for high-risk merchants. They connect customers with more than 100 different card processors, as well as services including chargebacks alerts, cryptocurrency processing, and more than 20 alternative and local payment methods, all with just one simple integration. Plus, they provide live 24/7 support for customers, making it easy to get help when needed.
Verticals & Product Focus: adult entertainment, CBD products, cryptocurrencies, dating, gambling, travel
Pricing: Pricing may vary depending on the industry. However, they have merchants starting between 2% up to 4.5%.
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Easy Pay Direct
Description:The folks behind Easy Pay Direct chose their name for a reason: small business owners need products that are easy to use. In response, they’ve created a product and an environment aimed at making your life easier. Easy Pay Direct provides a single point of contact to manage high volume and complex online payments. They allow for increased approval rates, multiple merchant accounts, a single payment gateway, and a single point of contact.
Verticals & Product Focus: information products, supplements, CBD, SaaS, general eCommerce
Pricing: Easy Pay Direct uses tiered pricing, starting at 2.44% + $0.17 per transaction.
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CardMax Payments
Description: Flexible accounts, easy set up, and competitive pricing are the hallmarks of CardMax Payments. The company offers extended services, relying on long-standing relationships with more than 30 domestic and international banking providers.
Pricing: CardMax does not publish rates on their website.
Durango Merchant Services
Description: Durango Merchant Services offers a wide range of features to both U.S. and international merchants, with a focus on high-risk merchants. Durango has earned high marks for its outstanding customer service and customized pricing plans.
Verticals & Product Focus: international, offshore, credit repair, bad credit, vape/E-cigarettes, fantasy sports, forex
Pricing: Durango Merchant Services does not publish rates on their website.
Host Merchant Services
Description: Host Merchant Services offers standard processing as well as special services for high-risk merchants. The company specializes in eCommerce businesses, even going so far as to offer a free website and email address to new merchants if requested.
Verticals & Product Focus: automotive, restaurants, travel, medicine, fitness, firearms, veterinary, life coaching, loan modification, SEO services
Pricing: HMS are very upfront about their pricing. eCommerce merchants pay a per transaction fee of 0.35% of the transaction total, plus $0.10 per transaction. Other fees apply, including batch fees, gateway fees, and monthly service fees.
Inovio
Description: With 25 years’ experience, Inovio emphasizes their seamless integration and service services that work with multiple payment technologies. The platform also includes APIs that are adaptable to virtually any programming language.
Pricing: Inovio Payments does not publish rates on their website.
Instabill
Description: Instabill specializes in merchant accounts and offshore processing for companies operating in high-risk verticals and locations. They offer an impressive range of international accounts, any of which can be set up to accept over 150 major currencies.
Pricing: Instabill does not publish rates on their website.
High-Risk Operations? Ask the Experts.
Chargebacks are at the core of high-risk credit card processing. You may not be able to prevent every dispute…but there are steps you can take to manage risk and keep more of your money.
With over a decade as a leader in the payments industry, Chargebacks911® is uniquely placed to help businesses analyze and diagnose their chargeback risk. We help merchants evaluate and manage factors that lead to elevated risk.
Are you pursuing high-risk credit card processing by choice? Or have you been limited by a MATCH List placement? No matter: Chargebacks911 can help. Learn how much you could save today.
