High-Risk Merchant Account: What Is It And Why You Need It?

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Businesses that fall under the category of ‘high-risk merchant account’ simply mean that your financial institutions/payment processors see your business at a higher risk of fraud or chargebacks. You might want to dive deeper into this article as we will cover what else you need to know about a high-risk merchant account, and why you need to have one.

What is a High-Risk Merchant Account?

A high-risk merchant account is a payment processing account for businesses that are considered to be of high risk by banks/financial institutions. As high-risk businesses are more prone to chargebacks, they come with the need for paying higher fees for merchant services. If your business comes with a high potential of chargebacks, or the bank found a history of many chargebacks and refunds, the bank may put a rolling reserve on your account. The rolling reserve protects the bank by making sure there is enough money in the merchant account at all times to handle any chargebacks that may occur. This money remains in reserve for the life of the merchant account.

Reasons a Merchant may be considered High-Risk

There are many reasons a financial institution/payment processing platform may label your business as ‘high-risk’, while others seem obvious (ex. adult industry, gambling, etc) others are more subtle. Every platform has a different set of criteria to categorize high-risk merchant accounts but, in general, here is what you can expect to be labeled high-risk:

1. Accepting International Payments

If a merchant sells to customers overseas/ internationally in countries that are listed as high risk of fraud, they may be considered high-risk (any country except the U.S., Canada, Japan, Australia, or the countries in Europe — most countries considered as first-world ).

2. High Transaction Volume

Merchants may fall under the category of high-risk if they have a high volume of transactions, or have a high average transaction rate. If a merchant processes over $20,000 in payments per month, or has an average transaction of $500 or more, they may be classified as high-risk.

3. High-Risk Industry

While a merchant may have a clean and spotless record, they may be labeled high-risk because the industry they are working in is considered to be at a higher risk of fraud, returns, or chargebacks. For example, subscription-based companies are labeled high-risk because many people sign up for a trial and forget to cancel their payments, resulting in disputes leading to chargebacks.

Reasons Why You Need A High-Risk Merchant Account

Here are some reasons and advantages you should know for having a High-Risk Merchant Account:

No Chargebacks, No Problem

Before having a High-Risk Merchant Account, your business is seen to have a higher risk of chargebacks or fraud because of the industry you are in, but with a High-Risk Merchant Account, your business can’t be charged back. Why? Because the high-risk merchant account provider that you work with won’t allow customers to make disputes or chargeback requests at all, the only time you’ll ever approve a customer’s refund is if you decide that they are entitled to it.

Establishes Legitimacy Image

Having a High-Risk Merchant Account will establish your business as a genuine and secure one in the eyes of your customers. Image and trust building are very important, especially nowadays cybercrime is rampant. Also, it is very important to give your customers a sense of financial protection, just in case.

Account Management

When you have a High-Risk Merchant Account, it will be a lot easier for you to manage your business’s finances. Also, whenever you have any concerns you can always contact or reach your high-risk merchant account provider for your queries.

More Opportunities

Having a High-Risk Merchant Account can significantly boost your business’s profitability. Just because you are only able to access a high-risk account does not mean that you aren’t going to be able to grow. Expanding your business internationally means that there will be much greater fees and cost that will be a bummer, but if you can market your business better internationally, your business can still make a considerable profit, thus more opportunities for growth.

Additionally, when you apply for a merchant account, you’ll be required to provide some important documents such as business and tax documents. After your application has been processed, your payment provider/payment processor will thoroughly assess whether you are a high-risk or low-risk merchant, and adapt their plan accordingly.


Hoory, Leeron. “High-Risk Merchant Account: What It Is and How It Works.” Forbes, Forbes Magazine, 7 Aug. 2022, https://www.forbes.com/advisor/business/software/what-is-high-risk-merchant-account/#:~:text=Getty,payment%20processor%20is%20taking%20on.

Brown, Martin. “Reasons Why You Need a High-Risk Merchant Account.” Jarvee, 16 Sept. 2022, https://jarvee.com/reasons-why-you-need-a-high-risk-merchant-account/.

High-Risk Merchant Account: What Is It And Why You Need It? was originally published in Piccopay Pte. Ltd. on Medium, where people are continuing the conversation by highlighting and responding to this story.


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