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A Complete Guide of High-Risk Merchant Account 2023

Before jumping to the high-risk merchant account directly, first, we must know what a merchant account is. And what factors make a high-risk merchant account different from a merchant account?

What Is A Merchant Account?

A merchant account is a business account issued by a Bank, Financial Institution, or Payment Service Provider that allows a merchant to accept the payment in multiple ways, including a credit card. It's similar to a current bank account as it lets various daily transactions. But generally, these are the accounts provided to the business with low risk, due to which these accounts are also referred to as low-risk merchant accounts.

What Is A High-Risk Merchant Account?

On the other hand, a high-risk merchant account is the same in the manner with many other added payment acceptance facilities, including online cards not present payments from credit cards, e-wallets, and cryptocurrencies. It also allows a merchant to accept payment in different modes and currencies. Generally, Banks and Financial Institutions label a merchant account high-risk if they consider your business for higher chargebacks, fraud, and higher return volume. There could be many reasons for considering the account as a High-Risk Merchant Account- nature of business, volatile demand, legal ambiguity, business structure, high likelihood of fraud, etc.

Let's Discuss The Reasons Merchants Are Considered High-Risk

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There are several reasons a merchant is labeled as a high-risk merchant by Bank. Also, PSPs and Financial Institutions have their set of criteria to label a merchant high-risk. Typically these are some below-mentioned reasons which are considered by all of them to be high-risk:

Higher Chargebacks

Chargeback is derived from two words charge & back, which means the charge taken for something is backed. Simply put, It's a returned amount to a credit or debit card for a fraudulent transaction or returned goods. High-risk businesses have a higher chance of chargeback for goods and services.

Illustration: a customer subscribed to IPTV services from an IPTV merchant and renewed automatically due to the subscription billing system. Payment has been deducted from the customer's Bank. Later, The customer didn't recognize the payment and did not want to continue the services. In that case, the customer raises a chargeback request to get his amount back. This is an issue of the chargeback, and it's just an example of one high-risk industry; numerous more examples are available.

To get rid of this friendly and non-friendly chargeback issue, high-risk merchant account providers have sophisticated three-tier chargeback prevention tolls: pre-transaction, post-transaction, and source detention.

Higher Chances Of Fraud

High-risk businesses have a higher chance of fraud. Frauds can be various types, but payment fraud is what we must focus on. A high-risk payment gateway facilitates you with top-notch security, including 3D security, AVS and CVV checker, Fraud scoring (transaction risk scoring), geological tracking, and PCI-DSS compliance. A high-risk merchant account provider safeguards you from fraud using Artificial Intelligence and the latest futuristic technologies.

High-Transaction Volume

A low-risk merchant's average transaction value costs not more than $500 per transaction, whereas a high-risk merchant transaction costs more than that, and the transaction volume is also much more than a low-risk merchant. This becomes a reason to consider an account high-risk as it's tough to track every transaction. A high-risk merchant account facilitates you with e-invoicing, real-time transaction tracking, and detailed transaction report at the end of the day, week, and months regularly.

International Business

If your business is multinational, then Banks and Financial Institutions will label your company as high-risk due to multi-currencies, multi-payment modes, and regulation issues. An international merchant needs to accept various currencies according to the business location. Multinational businesses also need to accept payment via different payment modes, including CNP payment and cryptocurrency. An international payment gateway will provide you the facilities to accept payment from any currency and also enables you to accept payment by various modes so that your business can touch the sky.

Furthermore, If a merchant sells to customers internationally in countries that are listed as high risk of fraud, they may be considered high-risk (any country except the U.S., Canada, Japan, Australia or the countries in Europe).

Nature of Business

The business dealing in items with a meager chance of a breakdown and decay is considered a low-risk business; also, the items of general necessity that have long life are regarded as low risk. But the business deals in items with high breakdown and decay in nature, items whose purpose is not universal and have a low life considered high-risk. The intangible goods market is also an example of a high-risk market, where goods and service are served over the internet and does not have a real presence. Generally, Travel, Furniture, Food, E-commerce, Online Gaming, Gambling, Casinos, Adult or Sex Toys Market, Escort Services and Forex Market are considered high-risk businesses.

As we already discussed, typical banking organizations do not provide merchant accounts for these businesses. A high-risk merchant account provider or PSP provides merchant accounts for all these businesses. Sometimes few PSPs create accounts according to the industry's need with enhanced features that have both high-risk and industry special features. PSPs can add some unique features that can help merchants grow their revenue.

For example, PayCly is a PSP that has specialized merchant accounts for every industry with added features. They have a special E-commerce merchant account for e-commerce businesses and a Forex Merchant Account for merchants who allow people to trade in the forex market. Same as PayCly has special accounts for Adult Toys Merchant Account and Escort Merchant Account for the growing pleasurable market and so on. This kind of account makes the purchasing environment more user-friendly and ultimately helps customer retention and revenue growth.

There can be many other reasons a business can be considered high risk, including volatile demand, low credit score, goods and services that allow advance booking, a new merchant in the market, etc.

Why High-Risk Merchant Charges Higher Fees

If you want to find the answer, then only a single word, high-risk, can justify the reason. In high-risk businesses, the percentage of chargebacks and frauds is very high. To safeguard you from these critical issues, top-notch security technology, futuristic fraud prevention tools, and state-of-the-art chargeback prevention tools must be implemented by a high-risk merchant account provider rather than a low-risk one. This continuous upgrading technology makes charges higher than low risk.

International credit card processing is also a cost-rising factor for a high-risk merchant account. Multinational currency acceptance and alternative payment modes are the other facilities that become the factor for the rise in charges.

A high-risk merchant can be required to sign a contract with longer terms, pay the penalty for ending it early, or pay a regular monthly or annual cost. A rolling reserve may also apply to high-risk merchant accounts, where the payment processor withholds a portion of your earnings until it can further confirm that your transactions were legitimate and not prone to chargeback.

How To Get A High-Risk Merchant Account

It's not as easy as a low-risk business can get a merchant account, but there are some strategies that can help you to get the high-risk merchant faster.

High-risk merchants can accelerate the acceptance process by collaborating with a reputable high-risk merchant account service provider with experience in high-risk payment processing. The partner we work with must have a good history and significant experience in the appropriate field, as these attributes can ultimately aid in accelerating the application and approval processes. The documentation must also be accurately completed, of course.

A high-risk business owner must check the documents' originality before submitting an application for a high-risk merchant account. It's crucial to be open and honest with your account service provider regarding every detail of your company. The tendency for merchants to falsify information is common and could result in account denial. Being genuine in your application procedure is better since being deceitful or misrepresenting information about your organization will almost always result in your merchant account being suspended, denied, or canceled.

Be Prepared with the Documents

To shorten the approval process, it is usually advisable to have all the necessary paperwork on hand before applying for a high-risk merchant account.

The first requirement is a business website. Your website must contain all of your company's items that are sold online. Having your relevant policies available for customers to review will help processors have greater faith in your legitimacy.

These are the other following documents you may be asked for:

  • Filled out and signed high-risk merchant account application
  • Original photo identification documents such as a passport or driver's license
  • Most recent utility bill, which may be a gas or electricity bill (to confirm physical address)
  • A canceled check that must include the accurate name of the company
  • Bank statements for the last three months (to check that the business is operating and functional)
  • Documents of your personal bank account for the last three months
  • Business strategy & plan
  • Articles of incorporation or a certificate
  • Articles of incorporation and memorandum
  • Article of incumbency or a certificate
  • Partnership agreement (if applicable)
  • Directors' certificate or something comparable
  • Evidence of the directors' current residence address
  • Resumes of the owners and signatures with authority (if applicable)
  • Copies of the contracts with suppliers (for retail merchants only)


We've learned in the article why a business is called high-risk, and also, we have got the idea why payment service provider is essential in the market as they are the one who enables most merchants to do business. You know now why a high-risk merchant account provider charges higher than the low one. Also, we have elaborate on the details of how you can get the high-risk payment gateway quickly. Lastly, we will say that hundreds of PSPs are available in the market, but we suggest you choose PayCly as this comes in a few that offer special industry merchant accounts that have the features of high-risk as well as industry.