What Is a High-risk Merchant Account?

Companies that are classified as "high-risk" require a high risk merchant account for accepting credit and debit card transactions. A high-risk enterprise is one with higher risk of fraud or chargebacks (and some other features too).

But, there isn't any central authority or a framework for the industry of payments that decides the risk factors that are associated with the business. Instead, each bank and each processor of payments has its own set standards.

Certain payment solutions providers may declare upfront that they do not provide services to specific sectors. Others may request more specific details about a company to determine risk, based on whether the business's application will be approved or denied. In the end, it all comes down to a processor's internal requirements and their perspective on risk management.

What factors determine if an Online Merchant is at risk?


Certain industries which are more risk-averse could be flagged automatically as high-risk enterprises. Here are a few instances that show high risk industries

  • CBD (Cannabidiol) E-cigarettes, CBD (Cannabidiol) and vape

  • Tasers and stun guns

  • Repairing credit

  • Multi Level Marketing (MLM)

  • Adult products and services

  • Pawnshops

  • Nutraceuticals and supplements

  • Tech support

  • Search Engine Optimization (SEO) services

Beyond this it is not the only aspects that could lead to declaring a company "high-risk":

  • Certain processors might declare you "high-risk" when you're an entrant who is new and has not previously processed transactions.

  • Low or no credit scores or credit scores when it comes to being in default on loans or loans. There are many other important aspects. If a lender has placed your name on the list of MATCH, it could raise your risk perception also.

  • This is also true for companies with controversial product lines or are operating in a legal hazard.

  • Businesses that are heavily dependent on international sales could also be at risk of having high risk scores. This is due to the extremely unpredictable economic trends in the world.

  • Industries that are heavily regulated by law or government are also known as "high-risk."

Visit Merchant Stronghold for offshore merchant services & large digital goods merchant services.

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