Credit Card Processing for High-Risk Merchants: What You Need to Know

Updated: September 17, 2020
by Cristian Morales

Convenience is the name of the game when it comes to payment solutions. Straightforward and secure payment processes are an integral part of the customer experience, which is why high-risk credit card processing solutions are well worth the investment.

One could argue that it’s actually high-risk merchants who really need to invest in payment solutions. After all, the term “high-risk” itself means that credit card companies may be hesitant to process your transactions based on the nature of your company.

That said, companies looking for high-risk credit card solutions are in luck. In this article, we’ll talk about everything you need to know about credit card processing for high risk merchants — from steps to choosing the right processing solutions to some helpful tips when it comes to using these new accounts.

Credit Card Processing for High-Risk Merchants

The ins and outs of credit card processing

How to tell if your business is high-risk

First things first: you might be reading this article thinking to yourself, “Is my business even high-risk to begin with?” notes that high risk merchants can get that designation because of “volatile revenue, poor cash reserves, bad credit, excessive chargebacks or industry-wide challenges.” The tricky thing is that high-risk designations are made under the discretion of the credit card merchant.

There are some industries that are generally regarded as high-risk. This could be because secure cash flow isn’t always guaranteed for businesses, incidents of fraud and refund rates occur more often within these industries, they sell items of high value, or they offer services that carry some legal risk. Examples include: 

  • Online casinos and/or gambling companies
  • Travel and booking sites
  • Telemarketing
  • Ticket brokers
  • Liquor 
  • Tobacco 
  • Debt collectors
  • Affiliate marketing
  • Adult entertainment 

If your business operates within these industries, there’s a good chance your business will automatically be designated as high-risk. This means you’ll likely get a note from payment processors or accounting gateway systems noting that your account has been classified as such.

It’s important to note that you can try to dispute a high-risk classification. In the case of customer chargebacks, provide records to show that the transaction was indeed initiated by them.

You can also ask to reclassify your business as low-risk, but this means you’ll have to reverse your company’s reputation and lessen chargebacks or other customer disputes over time.

That said, being classified as a high-risk merchant isn’t the end of the world. There are still payment options available to you, so keep reading below to find out what these are! 

Understanding the basics of credit card processing

Credit card solutions consist of two main options: physical point-of-sales (POS) systems and software for online transactions. Since both are made through the networks of the credit card provider, they charge service fees with every transaction made. Some may also choose to take percentages off each transaction.

This is where the cost comes in, particularly for high risk merchants. Chron states that payment gateway portals may end up charging you higher fees because of the added risk they’re taking on. When it comes to credit card processing, you might be asked to pay higher setup and chargeback fees.

Credit card processors might also enact a rolling reserve policy whereby they’ll keep part of your revenues on hold and release it to you at a later date. These companies hold your revenues as collateral should your business fall victim to fraud or a chargeback incident.

It goes without saying that neither of these scenarios are ideal for your business. As mentioned in the beginning of the article, there’s no set protocol when it comes to charging higher fees or how much of your revenue is held back for a rolling reserve.

This means it’s in your best interests to shop around and partner with high-risk credit card solutions that work for you.  

How to choose the right credit card processing solution 

Credit card options are one in a million nowadays, with providers trying to constantly create accessible payment solutions for their clients. To help sift through all the noise, below are some points you need to consider when choosing the right credit card processing solution. 

credit card processing solution


Processing fees, rolling revenue time frames, and minimum revenue (or how much money should be kept in your count to keep it open) are three important considerations when you’re shopping around for the right credit card solution to partner with.

Monthly service fees are also a huge factor to take into consideration, especially if you’re thinking of a long-term contract. 

Ease of Application

There are steps you can take to ensure that your application gets approved. You can start by updating your information to ensure that your company’s name is clearly reflected in your customers’ bank statements, as this can help avoid chargebacks. Keeping some liquid capital on you can also give payment processors the peace of mind knowing that you have a backup plan. 

Flexible Options

You should partner with service providers that offer flexibility with their options. POS systems and online transactions are a great start, but you should also delve a bit further and see the kinds of transactions they allow. Does their POS system allow for mobile payments? What types of credit cards are supported? 

Good Customer Service

Customer service is also something that differentiates good payment gateway companies from the great ones. You should partner with providers that offer 24-hour customer helplines and have quick guides to common technical issues. Having a mix of options means that help is always available as needed. 

Security Protocols

Last but not least, strong security protocols are necessary for any high-risk credit card solution. After all, it’s not just your company’s information that’s potentially on the line — you have to think about your customer’s data, too. 

As a general rule, you should veer towards merchants that are compliant with Payment Card Industry (PCI) standards. Meeting these standards means a credit card processing company regularly monitors their networks, operates with strict access control, and focuses on keeping customer data safe. 

Parting thoughts

Setting up payment accounts for your business is tricky enough on its own, but becomes a bit more complex if you’re in the world of high-risk merchants. But if there’s one thing you take away from this article, just remember that credit card solutions are still available to you. 

This guide is meant to give you a quick overview of what it means to be classified as a high risk merchant, as well as what to do to find the right high-risk credit card processing solution for you.

Stay tuned for more ways to amp up your online career! If you have any more questions about setting up payment solutions for your business, contact our expert team at Processing Card today! 

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About the author 

Cristian Morales

Freelance writer and graphic designer with a can-do attitude. I became independent after spending 6 years in the hospitality industry and 5 years in banking & finance. I'm an all-rounder guy, open to working with like-minded people.

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