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What is a high risk Merchant Account?

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Mika, Staff Writer

Friday, 7th May 2021

What is a high risk Merchant Account?

When you are looking to accept electronic payments for your business, you’ll need what’s known as a merchant account which is set up via your card processing provider. 

Depending on the nature of your business, along with factors such as your personal credit history, your card processing provider will either deem your business as secure or high risk. 

It is still possible to get a merchant account if your business is considered high risk. However, there may be certain limitations or fees you’ll need to be aware of.

To get you set up with your card processing provider quickly and efficiently, here is an overview of high risk merchant accounts to guide you. 

Card Processing

What are high risk Merchants?

Your business may be deemed as high risk if it’s in an industry that isn’t considered stable. Specifically, if the bank thinks there may be high occurrences of refunds, chargebacks or fraud.

In addition, if you have a poor personal credit rating (even if your business isn’t on the following list) your business may still have problems accessing a secure merchant account versus a high risk one.

Industries that are considered high risk include:

  • Adult entertainment

  • Affiliate marketing and advertising services

  • Alcohol or tobacco (including e-cigarettes/vaping)

  • Charities or nonprofits

  • Dating

  • Debt collection or loan companies

  • Events and ticketing services

  • Foreign exchange (Forex)

  • Gambling

  • Jewellers

  • Nightclubs 

  • Online auctions

  • Pharmaceuticals

  • Subscription services

  • Tattoo studios

  • Timeshares or pyramid schemes

  • Travel and tourism

High risk Merchant fees

The merchant fees you will pay for being high risk will depend on the specific card processing provider. Typical merchant fees are between 0.5% and 3% plus a small flat fee. But with high risk merchants the percentage can be as high as 5%. 

If your transactions are overseas, then the fees can be up to 10%. So, you may need to pass these fees onto the customer by raising the purchase price of your goods, which can affect how competitive your rates are. 

You’re also more likely to be subject to setup fees and longer holding of funds with a high risk merchant account. 

Card Processing

What do I need to apply for a high risk Merchant account?

When applying for a high risk merchant account, your card processing provider will request several documents from you. These can include (if applicable) an incorporation certificate, shareholder information, a copy of your passport, processing history for the last 6 months and your business licensing information. 

You also need to make your website or EPOS capable of processing card payments securely. With a website in particular, you may need to get an SSL certificate that is specific to a merchant account. 

High risk Merchant Account providers

A merchant account is the only way you can process electronic payments securely, so it’s a must for any business regardless of whether it’s considered secure or high risk. 

Keep in mind that as a high risk business, your card processing fees are likely to be more than a secure business. Though, you may be able to negotiate these in the future as card processors gain more trust in your business. 

Are you interested in setting up card processing for your business? You can find high risk merchant account providers with Bark to get you up and running.

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