Low-Risk Vs High-risk Merchant Accounts: Understanding the Payment Needs of Business


Card payments are a checkout favorite for many customers, making it a must-have in any business looking to thrive.

But to start processing payments, you need a merchant account. And in the world of merchant accounts, you are either low risk or high risk.

Low-risk classification is okay since you’ll be treated as any other merchant, but a high-risk categorization may mean a little trouble.

What’s low-risk?

Low-risk accounts feature affordable rates, compared to their high-risk counterparts. It is also easy to acquire as underwriting rules aren’t as tight as with the latter.

Any business with the following properties is low-risk

  • A monthly revenue not exceeding $20,000
  • An average ticket worth $50
  • Uses fraud tools like 3D Secure to safeguard against fraudulent practices on your website or shop.
  • Its payment processing firm also runs its checkout page.
  • You’re in a low-risk sector like foods, home appliances, grocery, fashion, clothing, pets, books, etc.

Lastly, your company runs in low-zones such as the US, Canada, Australia, South Korea, Singapore, or nations within the European Union.

What’s high-risk?

It isn’t easy to define a high risk merchant account because different account providers use different criteria to classify businesses.

Nevertheless, the nature of the activities in a business and retailers who accept CNP (card-not-present) transactions are often lead to a high-risk naming.

 They include businesses like Forex, financial services, subscription businesses, gambling, eCommerce shops, Forex, gaming, travel, etc.

Such businesses are naturally prone to reverse charges, and chargebacks is a major criterion in determining whether you get accepted or not.

Payment Processing Solutions for Risky Businesses 

A risky classification means most traditional account providers will avoid doing business with you at all costs.

Still, you’ll meet service providers and acquiring companies dedicated to high-risk sectors. However, most will charge expensive fees to carter for the risky nature of your venture.

When searching, prioritize processors who serve your industry. Most of them will understand your business better and offer flexible terms.

More features to look for in a payment processor include;

  • Security and compliance
  • Extra offerings such as payment hardware and funding
  • Different card payment capabilities such as prepaid, gift and debits cards
  • Relationship with reputable banking partners

Lastly, you’ll need a partner with an international presence to help you set up payments for your cross-border customers.

Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of opening a high risk merchant account. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie on his backyard porch, as should all right-thinking people.

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