There are two reason why you might be forced to choose a high risk merchant account. Either you or your business have poor credit history and/or you work in an industry that is considered high risk.
In either case you’ll be forced to pay higher monthly and transaction fees compared to customers deemed a safer bet by the acquiring bank. The good news is that if you compare merchant services you can still get an account with acceptable fees.
High-risk processors accept liability for increased risk, which requires more complex processes for in-depth analyses. The risk is calculated differently and it is always about how likely the business will be in generating chargebacks.
Maintaining the highest security level requires more involvement from a payment platform in fraud management as the risk factor goes up, which is also connected to having a team on board that monitors all transactions and online footsteps of high-risk merchants.
This is why it is so important to work with a reliable payment provider that has extensive knowledge and experience on this specified market.
High Risk Merchant Fees & Pricing
The following fees and pricing come SecurionPay which offers some of the lowest high-risk fees.
- Rates from 4.9% + 0.35 Euro per transaction.
- Rolling reserve between 5 and 10% withheld for a period of 6 months.
- Minimum a registration fee of 500 Euros
What Industries are considered high risk?
While the list below is not exhaustive it does include industries that are deemed high risk. Now high risk does not necessarily mean unprofitable, it simply means that the bank feels there is the strong possibility of refunds, chargebacks and fraud.
- Gambling and Casinos (both on and off-line)
- Travel, booking, and tickets
- Adult content, products and services
- E-cigarettes and Vaping
- Drugs and related accessories/paraphernalia
- Payday loans
- Alcohol products, beverages & Off-licenses
- Investment schemes
- Health supplements & Wellness Products
- Digital downloads
- Web hosting and ISP services
- Technical Support & Web Development
- Software and other downloads
- Credit Repair
- Money Transfer
- Jewelry, watches & related accessories
- Smartphones including sale, resale & spare parts
- Car parts
- Game codes & hacks
- Phone locking services
- Massage parlors & Tattoo studios
- Nightclubs / Cabaret bars
What if I work in a non-risky industry but just have bad credit?
If you’re looking at a high risk merchant account because you or your business are considered a bad credit risk then there’s good news. While you may initially have to pay high fees, if you can consistently pay your bills on time your credit should improve and eventually you’ll no longer be considered high-risk.
However, this can take some time.
What’s The Difference Between A High Risk Merchant Account & A Standard One?
If you get approved for a high risk merchant account the main difference you’ll notice are the fees and settlement period. Basically with a high-risk account you can expect the following:
- Longer settlement periods (1 week vs. 3 days)
- Higher transaction fees (depending on industry these can be up to 10% for overseas transaction vs. under 1% for transactions using a standard merchant account)
- Higher Reserve (initially you’ll have to leave at least 15% of transaction money in your account to deal with potential fraud, chargebacks, etc.)
- Higher monthly and or annual fees (Expect to pay at least £50+ a month)
Comparing High Risk Merchant Account Providers
When looking to get a high-risk merchant account you’ll be faced with a variety of options. Some good, some less so. So how do you know who to pick? Well here are a few things to keep in mind:
Do they work with other merchants in your industry?
All things being equal, it’s better to go with a provider who works with other merchants in your field. They’ll know what typical transactions look like and have a greater ability to detect fraud.
Do they have a customer service line you can call?
The unfortunate downside with working in higher risk industries is that occasionally problematic payment situations arise. If that’s the case it’s nice to know you pick up the phone and talk to someone right away.
What is their total fee structure (monthly fee, transaction fee and discount rate used)?
This perhaps the most important thing to consider. Some high-risk providers may offer low monthly fees but charge an incredibly high discount rate, whereas some other providers may charge a high monthly fee but low transaction fees.
The key is to have a rough estimate of your total transaction volume and compare based on that.
If a provider is not willing to fully disclose what their fee structure is, is it someone you really want to do business with?
* Please note we have an affiliate relationship with SecurionPay. This means they pay us a commission if you sign-up to use their services. However this comes at no cost to you since it is paid from their marketing budget.