High-Risk Merchant Accounts: The Best Providers of 2024

Running Down Some of the Top Providers for High-Risk Merchant Accounts

It’s virtually impossible for eCommerce merchants to operate without accepting credit or debit cards. Before you can accept electronic payments, though, you need a payment processor. This is an entity that acts as a liaison between you, banks, and credit card networks.

Many processors prefer to do business exclusively with merchants whom they see as “safe” or “low-risk” investments. Businesses that are considered “high risk” will have a limited selection of potential processors to choose from.

What is a High-Risk Merchant Account?

High-Risk Merchant Account: A high-risk merchant account is a subset of services that allow businesses in high-risk verticals to accept card payments from customers. These accounts typically come with stricter requirements and stipulations than standard merchant accounts and will be costlier to maintain.

Let’s say you want to open a new merchant account to accept credit card payments for your business. Any processor you approach will take a careful, detailed look at your business to determine if you fall under their definition of “high risk.”

High-risk merchant accounts are speciality services that certain payment processors offer to businesses that are more susceptible to chargebacks or fraudulent activity. Compared to standard merchant accounts, high-risk merchant accounts feature higher setup costs, steeper processing fees, and stricter contractual language. Adult entertainment, subscription services, and sellers that provide heavily-regulated services can all be considered high risk due to different factors.

In general, businesses seek out high-risk providers only if they are deemed ineligible for a standard merchant account. As we’ll discuss in the subsequent section, merchant service providers categorize businesses as either high-risk or low-risk based on factors like a seller’s processing history, financial position, line of business, and more.

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What Makes a Business High-Risk?

TL;DR

A confluence of factors related to credit, location, vertical, transaction history, risk level, and more all determine whether a merchant is categorized as low risk or high risk.

To be clear, businesses that are deemed to be high-risk are not necessarily flawed or problematic. It simply means that acquirers and payment processors deem that particular seller’s activities to be too risky for the merchant provider to underwrite profitability using standard terms.

Processors assign merchants to one of two categories — “high risk” or “standard risk” — based on a number of factors. Ultimately, though, this determination is based on the degree of financial risk your company presents to the institution. Specifically, how susceptible you are to fraud and chargebacks.

Factors used to determine whether a merchant is high-risk or not include:

Chargeback History

A merchant’s chargeback ratio is the most important indicator of risk an acquirer or payment processor will consider when underwriting a new client. To account providers, high chargeback ratios may signal poor service, inadequate dispute management tools, or poor fraud detection practices.

Merchants whose chargeback ratios exceed an account provider’s predetermined thresholds will almost certainly be classified as high risk. In severe cases, merchants with existing relationships with their providers may have their account frozen or closed.

Geographical Location

Businesses headquartered or operating in regions where fraud is more prevalent than usual are likely to be classified as high risk. The same applies to businesses that operate across national borders. This is because international sellers frequently submit card-not-present transactions for processing, encounter more chargebacks due to currency conversion errors, and must contend with onerous (and sometimes conflicting) regulations surrounding cross-border payments.

Product Vertical

Merchants who are assigned merchant category codes associated with higher baseline risk for fraud and chargebacks will often be categorized as high risk. Sellers themselves are aware of this risk factor; 30% of merchants surveyed in the Chargeback Field Report identify a “high-risk industry” as a chargeback risk factor. Examples of high-risk verticals include:

Casinos, Gambling, or Gaming
Telemarketing, Calling Cards, VoIP
Pharmaceuticals, Online Drug Providers
Adult Entertainment, Dating Services
Travel, Accommodations, Ticketing Agents
Attorneys, Bail Bonding Services
Subscription Services (Magazines, Collectibles, etc.)
Credit Repair/Debt Reduction Counseling

Sales Model

You may also be required to secure high-risk merchant services because of the method you use to generate sales or leads. Examples of high-risk tactics include:

Impression-based advertising (pay per impression).
Lead-based advertising (pay for sales leads).
Pay-per-action advertising to direct affiliate publishers or affiliate networks.
Outbound calling or upsell tactics (online or via call center).

Transaction Value

Cardholders who make large purchases have high expectations. When not met, these buyers may file chargebacks.

Fraudsters may also place large orders intentionally; without the right fraud detection tools, merchants will be unable to block purchases that ultimately lead to post-transaction return or chargeback fraud. For this reason, merchants who sell high-ticket goods and and services are likely to see more chargeback losses in terms of dollar value, and are thus more susceptible towards being classified as high risk.

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	Low-Risk Merchant	High-Risk Merchant
Average monthly sales volume	Less than $20,000	Over $20,000
Average credit card transaction	Less than $500	Over $500
Different currencies accepted	One	Multiple
Offer recurring (subscription) payments	No	Yes
Placed on MATCH list/history of excessive chargebacks	No	Yes
Main product offering	Low risk: books, office supplies, clothing, home goods, etc.	High risk: software, digital, tickets, seasonal items, etc.
Based in or sell to a high-risk region (anywhere outside the US, EU, CA, JPN, or AU)	No	Yes

Note that there is no middle ground here. Once a processor evaluates your business, they'll make an ‘either/or’ decision. In the processor's eyes, you're either high risk, or you're not.

What to Expect With a High-Risk Merchant Account

TL;DR

High-risk merchant accounts come with higher fees, stricter contracts, and tighter guardrails than standard merchant processing accounts.

Remember, the card networks’ main goals are to limit exposure to fraud and chargebacks. While being labeled a ‘high-risk’ merchant sounds bad, it really just means that your industry has been a known source of disputes and payment friction in the past. It’s not a personal indictment or a comment on the efficacy of your business.

That said, the privilege of accepting credit cards still comes at a price. And unfortunately, this means that the cost of doing business in a high-risk vertical can climb pretty high due to a number of factors:

Higher Costs

High-risk processors are willing to take on merchants turned away by other services. A few providers in this space even specialize in backing merchants that even other high-risk processors have turned down. Naturally, this accommodation comes at a cost.

Providers specializing in high-risk merchants typically charge higher-than-average fees and demand strict contract conditions. The contracts these companies require also tend to be more strict than conventional merchant processing agreements.

Risk of Signing With Predatory Operator

Unfortunately, not all service providers are ethical. Some may take advantage of high-risk merchants by charging junk fees, offering difficult-to-terminate contracts with unreasonable terms, setting unrealistic chargeback limits with harsh penalties if exceeded, or refusing to offer proper customer support.

Before you sign with any service provider, be sure to do research, check reviews, and look up reports from the Better Business Bureau and other advocate groups. Finally, always read the fine print (or better yet, get your attorney to read it).

Stricter Underwriting Processes & Monitoring

High-risk payment processors have stringent underwriting guidelines. They may request detailed information about your sales model, financial records, and records of compliance with industry regulations during the account application process.

A high-risk processor may regularly monitor your transactions for red flags. If your operations exceed a service provider’s risk appetite, you may be subject to longer fund hold times.

Revenue-Limiting Reserves

Account reserves are a way for the payment processor to hedge its bets. If something goes seriously wrong, the account reserve will insulate your acquirer from loss.

There are three basic types of reserves. First, an up-front reserve gives the processor permission to withhold all funds from credit card transactions until a reserve balance is met. With a rolling reserve, providers withhold a percentage of your daily revenue and hold it for a limited time, returning the money as other funds become available. Finally, there are fixed (capped) reserves, meaning the acquirer withholds funds up to a predetermined reserve cap. You can learn more about merchant account reserves here.

Benefits of High-Risk Processing

TL;DR

High-risk merchant accounts come with some benefits. They enable merchants to accept a broader variety of payments and may allow sellers to “budget” for anticipated chargebacks. Some high-risk service providers also offer complimentary fraud protection tools to merchants.

We won’t mince words: standard, low-risk merchant accounts are preferable to high-risk ones. But, we would be remiss not to highlight some unique advantages to having a high-risk account:

Wider Customer Base

High risk processors are more flexible and can allow merchants to accept cross-border payments. Sellers who use this feature to their advantage can reach a wider customer base and drive sales in countries or regions that were previously inaccessible. eCommerce businesses operating in niche or unproven verticals can also use high-risk accounts to strategically facilitate payments from their target customers.

Advanced Fraud Detection & Prevention

High-risk processors often implement robust fraud detection and prevention tools like machine learning algorithms, risk scoring tools or device fingerprinting, which you can use to your advantage to prevent chargebacks. Additionally, some processors offer educational resources on how to mitigate risks and chargebacks.

More Predictable Cash Flow

Account reserves tie up funds, but they exist for a good reason. An account reserve serves as a safety net and ensures there are available funds to sort out refunds or chargebacks. Without adequate reserves, merchants prone to chargebacks could be forced to draw up credit lines or overdraft their accounts — both scenarios that could put sellers in an even worse position.

Questions to Ask When Choosing a Provider

You should perform thorough due diligence before selecting a high-risk merchant account provider. This means asking tough questions surrounding the provider’s:

Expertise & Reputation

Ensure the provider has experience dealing with businesses in your vertical. Questions to ask include:

How long have you worked with businesses in my industry?
What do you deem an “excessive” chargeback rate, and what are the consequences?
Do you have any case studies or testimonials from other clients in my vertical that you can share?

Costs

We mentioned earlier that high-risk accounts are costlier to maintain compared to standard accounts. To dig deeper, you can ask:

Can you provide a schedule of fees? Are there any hidden fees you’d like us to know about?
What upfront and recurring fees do you charge? What is the general fee structure like?
Do you impose fees or surcharges for disputes?
What are your processing fees for credit and debit card transactions? What about other payment methods?
Are there additional surcharges for recurring billing or renewals?

Contract Terms

Find out what the contract says about reserve policies and transaction limits, the duration of the contract, the procedure for renewing or renegotiating contracts, and termination penalties. The contract should also state whether it’s possible to renegotiate fees based on their performance:

Do contracts come with minimum term lengths? What happens if I want to cancel early or switch providers?
What is your renewal or cancellation notice period? If I don’t cancel within that period, do you charge penalty fees?
Do you match rates of other providers?
Are fees negotiable? If I achieve lower chargeback rates than anticipated, will my fees decline?

Fraud Prevention Measures

Compare processors to see which of them have better fraud detection and response features. Consider asking about:

What fraud detection and prevention tools do you offer? Are they included, or do they come at an extra cost?
What features do you offer to merchants who want to proactively decrease the number of chargebacks they receive?
From a fraud prevention perspective, what sets your services apart from your competitors? What about from a standard merchant processing provider?
Can we access real-time transaction data?
Do you offer integrations with third-party fraud prevention and/or dispute response providers?

Account Approval Process

Find out about the documentation needed for application, how an application is submitted, and the duration it takes to get their account approved or declined. Also, ask about possible reasons why an application can be declined, and steps to take to rectify such situations:

Can you walk me through your underwriting process? What metrics do you use to evaluate our risk and price your services?
What documents do we need to provide to you? What supplemental information can we provide to speed up the process on your end?
How long does your underwriting process take? If approved, when will our account be ready to use?
If we’re not approved, will you provide a reason for the denial? Can we re-apply?

Customer Support

Consider the availability and quality of a high-risk service provider’s customer support channels. Clarifying questions include:

Are there different channels for general inquiries and technical support?
How available is your customer support team? How long will we have to wait for a response by email, phone, or live chat?
Do you have a self-serve knowledge center or databases we can use to solve common problems on our own?
How can we share feedback? How do we know if you are acting upon our feedback?
If we have an urgent problem, how will you handle it? Do you offer a direct hotline or a dedicated account manager?

Payment Methods

Find out what card brands are supported, the payment methods accepted, whether international payments are accepted, and whether you can create and send invoices through the processor’s system:

Which card networks are supported, and which aren’t?
Do you support international cards or allow cross-border transactions? How are currency conversions handled?
Do you support alternate payment methods, like ACH?
What about foreign alternatives, like FPS or SEPA?
Beyond card payments, do you support invoicing, bill pay, or other AR/AP features?
What data protection standards, laws, or regulations do you follow? How do we know that you’re keeping our data and our customers’ data safe? Have you suffered any recent hacks or data breaches?

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Top High-Risk Merchant Account Providers of 2024

So, you need help from one of these service providers. Where should you start your search, 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. We referenced our own internal data and historical pricing information, as well as reviews and product listings from G2 and Forbes to compile our “Best High-Risk Processors of 2024” list. Entries are listed in alphabetical order:

Bankful, formerly known as Pinwheel Pay, is here to simplify the payment process in high-risk verticals. Their platform provides a comprehensive suite of payment solutions designed to meet the unique needs of these merchants. With features like subscription billing, cryptocurrency support, and automated fraud prevention tools, Bankful empowers you to efficiently manage your revenue, grow your customer base, and securely expand your business.

Their user-friendly API, hosted forms, and additional tools make processing card-not-present transactions a breeze. Simply enter transactions into the virtual terminal and take advantage of features such as tokenization, electronic invoicing, automated email receipts, and seamless integration with third-party shopping carts and CRM systems. With Bankful's intuitive gateway, managing card-absent payments has never been easier.

Verticals & Product Focus:

Adult entertainment, CBD products, cryptocurrencies, cannabis products, gambling, travel, pawn shops, smoking accessories, subscription billing, BNPL

Pricing:

Bankful offers tiered pricing at four different levels:

Standard: $0/month, $0.10 per transaction, credit card volume 0.60%
Startup: $15/month, $0.10 per transaction, credit card volume 0.60%, crypto volume 1.5%
Success: $20/month, $0.10 per transaction, credit card volume 0.60%, crypto volume 1.5%, $0.06 per crypto transaction, 2% check volume, $0.10 per SMS transaction
Bankful Plus: $95/month, $0.08 per transaction, credit card and BNPL volume 0.55%, crypto volume 1%, check volume 1%, $0.05 per crypto and check transaction, $0.05 per SMS transaction, $45 per chargeback alert*

**this option comes with credit card processing, crypto processing, fraud shield, eCheck, email/SMS invoicing, QuickBooks, BNPL, subscription billing, and chargeback alerts.

Pros:

Serves a wide range of verticals
Plug-and-play simplicity
Chargeback alerts (for an added fee)
Native integrations with major eCommerce platforms

Cons:

Some customers mentioned seeing elevated decline rates

Learn more about Bankful

Durango Merchant Services provides an extensive array of services to merchants in both the US and abroad, specializing in high-risk accounts. Durango is highly regarded for its exceptional customer support and tailored pricing strategies.

Durango enables payment acceptance through ACH, eCheck, and cryptocurrency, supporting transactions in various currencies. Its genuine focus on high-risk merchants positions it as a formidable partner for your business, particularly if you’ve experienced restricted merchant service options or those who have previously faced rejection or account termination.

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. However, one could reasonably expect a similar fee structure to PaymentCloud. Durango sells its equipment directly instead of solely offering it via a long-term contract. The cost for hardware ranges from $170 to $400.

Should the absence of clear fee disclosure not deter you, Durango stands out as a valuable ally, particularly for those with few alternatives who seek a straightforward and honest service provider.

Pros:

Specializes in serving extremely high-risk companies
Offers fraud protection services and educational resources
Supports processing for cryptocurrency transactions

Cons:

Fee details are not available online; quotes are provided upon request

Learn more about Durango Merchant Services

The team at Easy Pay Direct selected their name with a purpose: understanding that small business owners prioritize simplicity in their tools. Consequently, they've developed both a product and a service designed to simplify your operations. Easy Pay Direct offers a unified solution for handling high-volume and intricate online transactions, enhancing approval rates, and allowing for multiple merchant accounts through a single payment gateway, all managed via one point of contact.

Easy Pay Direct also enables you to leverage chargeback alerts, decline salvage, periodic billing, mobile transactions, transaction distribution, and hosted payment pages. They enable connections with over 250+ shopping carts, unlimited transactions for high-value purchases, and more.

Verticals & Product Focus:

information products, supplements, CBD, SaaS, general eCommerce, MLM marketing, adult industry, neutraceutical, alcohol, firearms

Pricing:

Easy Pay Direct no longer displays pricing on their website, but historically, they offered tiered pricing, starting at 2.44% + $0.17 per transaction.

Pros:

Serves a wide range of verticals
Offers a multitude of gateway options
Unlimited transactions
Chargeback alerts

Cons:

No pricing listed
Fees could be on the high end

Learn more about Easy Pay Direct

Host Merchant Services (HMS) collaborates with Electronic Merchant Systems to offer payment solutions to high-risk merchants. With this service, businesses can process payments through credit cards or ACH transactions, whether online, in-store, or via mobile POS. Host Merchant Services is an excellent option for companies with monthly sales exceeding $10,000. Additionally, the company mentions the possibility of serving businesses involved in selling products or services that border “illegality.”

Verticals & Product Focus:

Adult entertainment, CBD products, cryptocurrencies, dating, gambling, travel, pawn shops, gambling, loan modification companies

Pricing:

HMS applies fees for each transaction, yet it does not impose any account fees or require contracts. The transaction fees consist of interchange fees in addition to:

Retail storefronts: 0.25% and $0.10 for each transaction
Restaurants: 0.20% and $0.9 for each transaction
eCommerce sites: 0.35% and $0.10 for each transaction

While the pricing may be steep for startups or very small enterprises, the costs may be justified for larger businesses.

Pros:

Serves a wide range of industries
Excellent customer service
No monthly account fees
Offers support for zero-cost credit card processing

Cons:

High startup and processing fees

Learn more about Host Merchant Services

PaymentCloud is one of the most user-friendly high-risk merchant account providers, distinguished by their exceptional customer service. This service allows for the processing of payments via credit card, ACH, eCheck, or cryptocurrency. They accommodate a range of transaction modes such as POS, mobile, and online checkout, too.

For businesses requiring physical equipment for card transactions, PaymentCloud offers a complimentary retail or mobile EMV terminal upon registering for a no-cost credit card processing account. This includes incentives for cash payments to customers.

Verticals & Product Focus:

CBD oil, firearms & ammunition, adult entertainment, credit repair, bad credit, vape/E-cigarettes, airlines, tax preparation

Pricing:

PaymentCloud doesn't offer a uniform fee structure like many providers catering to high-risk merchants. That said, our investigation found that high-risk merchant transactions may incur rates between 3.5% and 5%, plus a $0.25 fee per transaction.

PaymentCloud also typically levies a monthly payment gateway fee of $25. Additionally, merchants don't have to be concerned about any early termination fees for their accounts.

Pros:

Excellent customer support ratings
Versatile software integrations
No cost-credit card processing

Cons:

Fees aren’t listed online
Monthly payment gateway fee

Learn more about PaymentCloud

Soar Payments provides a variety of payment solutions, including credit card processing, eCheck, and ACH, catering to many merchants with a particular focus on those deemed high-risk or challenging to accommodate. The company takes great pride in its outstanding customer service, with Soar Payments representatives readily accessible by phone to address merchants' processing requirements. Additionally, Soar Payments offers competitive pricing alongside a straightforward application procedure.

Soar Payments is ideally suited for merchants based in the U.S. who have fair or higher credit scores and operate in medium-risk, non-controversial sectors. However, it should be noted that they do not provide services to businesses with very poor credit, or merchants listed on the MATCH list.

Verticals & Product Focus:

Antiques & collectibles, credit repair, debt consolidation, e-cig/vape, moving & storage, nutraceuticals, precious metals, web design

Pricing:

While Soar Payments keeps their customer fees private, it offers the option to quickly obtain an online quote. Historically, Their general fee structure was known to include interchange plus pricing or qualified discount rates ranging from 1.5% to 4%, depending on the vertical and merchant.

Pros:

Receive an immediate price estimate with a completely online application process
Robust customer support based in the U.S
Medium-level industry pricing

Cons:

The company states it does not work with merchants from these verticals: adult products, cryptocurrency, debt collection/relief, forex, gambling, kratom or marijuana, payday loans, pharmaceuticals, or technical support

Learn more about Soar Payments

How High-Risk Merchants Can Fight Back Against Chargebacks

Even with all the downsides, some merchants prefer—or at least are willing to accept—working with a high-risk merchant account. Many verticals represent significant earning opportunities if you’re willing to accept the higher risk and profit withholdings that come with them.

There's another appealing element of high-risk accounts to consider as well: limited chargeback penalties. Providers are less likely to close a high-risk account because of excessive chargebacks, which is why many merchants end up seeking high-risk merchant processing in the first place. Maintaining a high-risk merchant account may be costlier, but it’s a reliable way to ensure business sustainability in the face of rising chargeback issuances.

That said, if you are experiencing a high rate of chargebacks or are looking to lower your chargeback ratio to avoid higher costs…there is an alternative.

Chargebacks911® enables sellers in all MCCs, sales models, and product verticals to increase profitability. We help standard merchants avoid excess chargebacks and help high-risk merchants recoup revenue that would otherwise be lost to fraudulent chargebacks.

FAQs

What is a high-risk merchant account?

A high-risk merchant account is a subset of services that allow businesses in high-risk verticals to accept card payments from customers. These accounts typically come with stricter requirements and stipulations than standard merchant accounts and will be costlier to maintain.

What is considered a high-risk transaction?

A high-risk transaction involves a higher probability of fraud or chargebacks, often occurring in industries known for their regulatory issues, financial instability, or the likelihood of disputed purchases. This can include transactions in sectors like adult entertainment, gambling, and eCommerce.

What are the rates for high-risk merchant accounts?

Providers specializing in high-risk merchants typically charge higher-than-average fees and demand strict contract conditions. A few providers specialize in backing merchants that even other high-risk processors have turned down. Naturally, the fees and contracts these companies require tend to be more strict than conventional merchant processing.

Is high-risk payment processing legit?

Yes. Even with all the downsides, some merchants prefer — or at least are willing to accept — working with a high-risk merchant account. Many verticals represent significant earning opportunities if you’re willing to accept the higher risk and profit withholdings that come with them.

Why do you need a high-risk merchant account?

You might need a high-risk merchant account if your business operates in an industry prone to high chargeback rates, has a history of financial instability, or deals with high-value transactions. These accounts are specifically designed to manage the increased risk and provide the necessary support to process payments securely, despite the challenges inherent to your business sector.

High-Risk Merchant AccountIn a High-Risk Industry? Here’s Where to Start Your Search for Processing.

In a Nutshell

Running Down Some of the Top Providers for High-Risk Merchant Accounts

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What is a High-Risk Merchant Account?