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High Risk Merchant Account Breakdown

Do you want to get credit cards processing online, over the phone, or via mail order? Have you had a tough time getting approved for a high risk merchant account? If so, you may be wondering: What is it – “high risk”, and how does it apply to my business?

What is a High Risk Merchant?

Any business where there is no customer’s signature on the receipt of the credit card purchase – all e-commerce and mail order/telephone order (MOTO) businesses – has the potential to be labeled “high risk” by banks providing merchant accounts. In the list below you will find out what high risk merchants consider which some card-not-present businesses include:

  • Adult entertainment merchants
  • Online travel agencies and travel merchants
  • E-Cigarette merchants
  • Online pharmacy merchants
  • Online spieling merchants
  • Pre-paid calling card merchants
  • VOIP merchants
  • Offshore merchants
  • International merchants
  • Mail Order / Telephone Order (MOTO) merchants
  • FOREX merchants
  • Tobacco merchants

In case of not being aware in what industry you are, your business may be considered high risk if:

  • Starting a new e-commerce business you expect high monthly sales volumes.
  • You have a history of customer disputes or a high chargeback rate.
  • Availability of a high average transaction value.
  • You offer a subscription product or service.
  • You’ve had a merchant account terminated by a bank in the past.
  • You have recent bank failure or just a poor credit history.

High Risk Means Hard Times

If your business is considered to be high risk, you might be refused for a merchant account without knowing the reason. Even if you are approved for a high risk merchant account, banks might set strict trading conditions that make it impossible to run a beneficial business. High risk merchant accounts often require:

  • Large up-front deposits
  • Delayed payouts
  • High reserves
  • High credit card and transaction fees
  • Caps on processing volume

All of those restrictions can mean the difference between your business’ success and failure.

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