Table of Contents Hide
- What Is a High-Risk Merchant Account?
- How Do Choose a High-Risk Merchant Account?
- Best High-Risk Merchant Account
- High-Risk Merchant Account Instant Approval
- High-Risk Merchant Account Providers
- Why Do You Need a High-Risk Merchant Account?
- What to Consider When Looking for a High-Risk Merchant
- High-Risk Merchant Account FAQs
- How do I get a high-risk merchant account?
- What Are High-Risk Merchant Account Fees?
- Who Needs a High-Risk Merchant Account?
- Similar Articles
As the number of digital transactions increases, more and more companies are seeking low-cost options for handling financial transactions—actually, only 19% of shoppers still like paying with hard currency. Despite the fact that many PSPs work with a wide range of industries, there are always some that they treat with more caution. These businesses typically operate in high-risk sectors where fraud and chargebacks are more common. It can be challenging to find a reliable payment processor if your company is in the “high-risk” category. Whether you’re opening your first online store or working to expand an existing one, the word “high-risk merchant account” is certain to come up at some point. The article discusses high-risk merchant account providers in the USA, with a focus on the instant approval of funds.
What Is a High-Risk Merchant Account?
A high-risk merchant account is a type of business bank account set up by a payment processor that allows merchants to accept credit and debit cards for their business despite being branded as a high-risk firm by a prior processor or payment service provider. The cash collected from transactions (minus processing fees) is sent straight to the merchant’s business checking account at the merchant’s bank within 24-48 hours on average.
Furthermore, many merchant service providers avoid providing merchant accounts and other payment processing services to recognized high-risk organizations. Unfortunately, this leaves high-risk business owners with few processing options, drastically limiting their capacity to make cash and expand their operations. High-risk providers, on the other hand, assist firms in obtaining the processing assistance they require through banking institutions with more lenient rules.
How Does High-Risk Merchant Account Work?
When it comes to the kind of businesses they will work with, many merchant service providers impose stringent limits that can result in account suspensions, terminations, and frozen cash. In the worst case, the latter can get you added to Mastercard’s MATCH list, an electronic database of high-risk shops. However, a merchant services provider that specializes in dealing with high-risk businesses can open an account for merchants so they can operate efficiently without worrying about losing their funding.
To facilitate the processing of payments for high-risk firms, a high-risk merchant account was developed. The types of businesses that can be accepted as customers by a given payment processor are limited by the processor’s credit policy. The ability of the processor to perform extensive underwriting, due diligence, and with the backing of their sponsor bank is the primary factor in the disparity in credit policies offered by various processors. Processors with stronger underwriting capabilities are in a better position to handle high-risk transactions and may thus onboard a wider variety of industries.
Payment gateways, virtual terminals, and other payment technology platforms can be integrated with high-risk merchant accounts in the same manner that they are with ordinary merchant accounts. With a high-risk merchant account, any firm, regardless of what makes it a high-risk one (industry, operations, or processing history), can have access to the robust payment processing features that were previously unavailable to them.
How Do Choose a High-Risk Merchant Account?
When evaluating a high-risk merchant account, you should pay attention to the following details:
Undoubtedly, the cost will play a significant role in your provider selection; however, it is important to read the fine print to uncover any hidden fees and determine whether or not the pricing structure is appropriate for your company. Consider hypothetical scenarios to see how fees might apply in practice; for instance, how much would you be charged for a card transaction of £100 and how would that amount compare to the fees for a transaction of €100 or $100?
#2. Monthly vs Pay as You Go
High-risk merchant account providers typically provide both monthly fees and pay-as-you-go plans; choosing the right one is essential for the success of your company. Companies with fewer transactions per month may benefit more from a pay-as-you-go model, while larger, more established businesses may get their money’s worth from a monthly or annual subscription plan, but you should do the math to discover which is best for your company.
#3. Payment Transfer Time
It’s easy to forget, but the amount of time it takes for a firm to receive a payment is of the utmost significance. Simply said, this is the amount of time it takes for the money to go from the merchant account to your bank account, a process that can take anything from a few days to a week. This has significant ramifications for your financial flow and needs to be checked out before you sign up for anything.
Best High-Risk Merchant Account
Here are some of the best high-merchant accounts.
More than 400 thousand businesses rely on WorldPay as their merchant account provider. It is well-known for the safety it provides and the honesty of its price. It doesn’t cost more to process refunds or accept payments in different currencies.
Pay-as-you-go, monthly, and standard merchant packages are all available through WorldPay for brick-and-mortar establishments.
The pay-as-you-go plan requires an initial investment of $150 for a payment terminal (card machine), while the other plans do not.
A rolling monthly contract is advised for established firms, although even the $45 per month package has a maximum of 850 transactions unless you pay for a customized package.
For services like round-the-clock assistance and superior fraud detection, a tailor-made plan is a necessity.
- A prominent name in the industry
- Payment plans, including pay-as-you-go and monthly, are available.
- Offers a Full E-Commerce Stack
- It doesn’t cost anything to accept foreign currency.
- Outstanding data analytics system
- There is an additional fee for round-the-clock service.
- Limits on the frequency of purchases
- Exorbitant per-use costs
Both you and your consumers should be familiar with PayPal, as it is a widely recognized brand. Overall, its high-risk merchant account services are solid, and there are no surprises in the pricing.
Unfortunately, PayPal’s pricing structure might be difficult to decipher. PayPal does not charge a monthly fee for its merchant accounts, but instead adds a small percentage to each transaction to cover its costs. You may charge a different rate for accepting payments made both online and in person.
Also important is the fact that PayPal is both a virtual terminal and a payment gateway all in one.
This means that you receive immediate payment into your PayPal account after each sale. It typically takes between three and five business days for monies to transfer from a PayPal account to a bank account.
- Popular Trademark
- Individualized pricing based on specific criteria
- No recurring costs
- Complete commercial solution
- It’s not always easy to decipher fees.
- Accepting payments in many currencies might add up in cost.
For firms in the gaming, pharmaceutical, and adult entertainment industries, CcNetPay offers a specialized high-risk merchant account.
Because of its close relationships with numerous European acquiring banks, it is an excellent option for companies doing business within the European Union.
It publishes its prices openly on its website. ccNetPay specifies that the main distinctions between its low-risk and high-risk merchant services are the higher yearly charge of $950 and the lengthier payout period of about seven days for high-risk merchant accounts.
There are no transaction volume caps like WorldPay has.
The costs are hefty, and you may have to wait a few weeks for your account to be activated.
- Easy-to-understand costs
- Facilitates Business Within the EU
- My clients are businesses in the healthcare and internet industries.
- Any amount of deals can be made.
- Costly yearly subscription
- It may take a few weeks to activate your account.
High-Risk Merchant Account Instant Approval
It’s unusual for a new merchant account to get instant approval, especially for high-risk businesses. As a result, many companies offering merchant services advertise instant approval for a high-risk merchant account. A promise of “instant approval” may seem appealing, especially if your company is seen as high-risk.
Furthermore, waiting to be approved for a merchant account is frustrating for any business owner since it delays access to a crucial service that affects revenue. While third-party processors like Square, Stripe, and PayPal make it easy for businesses to begin accepting payments almost instantly, they refuse to work with the vast majority of high-risk enterprises.
There is no such thing as “instant approval” for a high-risk merchant account, however, some organizations do promise faster review times. The ultimate approval for a high-risk merchant account always takes longer than it does for a low-risk firm, notwithstanding the rare “instant approval merchant account with no credit check” commercials you may see.
High-risk merchant account instant approval often takes three to five business days, but standard low-risk businesses can sometimes acquire it in as little as a day or two. It may take as long as three to five weeks to complete the procedure.
So, what’s taking so long? More thorough research on the business and owner’s credit histories, as well as the nature of the business, is required for approval of a high-risk business.
How Do Companies Offer Instant Approval for Merchant Accounts?
Payment processors’ claims that they can “pre-approve” high-risk businesses in as little as 24 hours or “instantly approve” are very deceptive. The two-stage approval process for your company is not mentioned. The first is the validation steps taken by the payment processor itself. Second, the issuing bank for the service provider will examine your company.
In the event that the financial institution declines to do business with you, the payment processor will have to continue shopping you around at other financial institutions until one agrees to do so. Your high-risk merchant account will typically be approved within 2–5 business days, but it could take up to 2 weeks for more complicated accounts. Because of this, getting the ball rolling as soon as possible is strongly encouraged.
Can I Speed Up a High-Risk Merchant Account Approval Process?
You should find a reliable merchant account service that focuses on high-risk processing to expedite the acceptance process. The approval and registration processes might be sped up when you work with a reliable partner who has a history of success in your field. Also, check that your paperwork is in order.
Furthermore, when applying for a merchant account as a high-risk business owner, you’ll need to offer a lot more details to prove your legitimacy. The approval process will go much more quickly if you can submit all of these data at the time of your initial application. You might be required to give evidence like these:
- Completed Application for a Merchant Account
- Owner’s Curriculum Vitae or Resume
- Valid Passport or Photo ID
- Marketing Strategy
- Home Utility Receipt
- Statements from the past three months must be processed.
- Documentation of contracts with vendors
- Personal bank statement copies
- Bank reference letter for personal use
- Statements of your company’s bank accounts
- Constitutional Documents
- Constitution and Bylaws
- Snapshot of the homepage of your company’s website
It’s also crucial to be completely forthright with your merchant service provider. Many businesses risk account denial because they conceal material information. If you’re working with a merchant services provider that has experience with high-risk firms, it’s possible that your less-than-perfect credit history won’t prevent you from opening a merchant account. If you apply for a service, it’s ideal to provide accurate information about your company. In addition, if you lie or provide false information, you risk having your account closed.
High-Risk Merchant Account Providers
The best high-risk merchant account providers are those who engage in ethical sales tactics, provide clear instructions for opening an account, provide responsive responses to customer inquiries, and offer fair rates and fees. Considering these factors, we will examine the top high-risk merchant account providers, which include PaymentCloud, National Processing, Durango Merchant Services, and others.
PaymentCloud, Inc. is a merchant services company that works with businesses of varying risk profiles. Merchant accounts for moderate and high-risk enterprises are the company’s forte. Most of PaymentCloud’s merchants are located in the United States.
Furthermore, the company has established a sterling name in the payments industry thanks to its reasonable pricing, generous contract lengths, and lack of hidden expenses. In fact, providers like Stripe and Dharma Merchant Services now direct businesses that were denied an account with them to PaymentCloud.
With a stellar 4.5-star rating, PaymentCloud is one of the few high-risk merchant account providers that made our recommended list.
- There are no costs associated with applying or opening an account.
- Fees and prices that are fair
- Low-risk merchants are exempt from the monthly fee.
- Accepting Credit Cards, No Fee
- Infrequent public outcry
- There is no pricing information available to the general public.
#2. National Processing
It is a one-stop shop for merchant services, catering to both low- and high-risk businesses. National Processing, in contrast to its competitors, prominently displays detailed pricing information on its website.
Furthermore, National Processing’s billing cycle is really month-to-month, with no commitment required and no penalties for leaving early. One caveat, though: you’ll have to foot the bill for whatever processing hardware you end up using. Or, you can accept a long-term contract and an early termination cost in exchange for the corporation providing one “free” terminal with each account. Thankfully, it appears that National Processing’s early termination fee is only enforced if you cancel your account in order to migrate to a competing service without first providing National Processing a chance to match the rates and costs of the competing service.
As one of the best high-risk merchant account providers, National Processing has earned our highest rating of 5 stars. Bear in mind that even if NP doesn’t take you, other risky possibilities might.
The company’s services are of the highest quality, yet they come at surprisingly low prices. I have no qualms recommending them to any company in the market for the most affordable prices. The basic account may lack further features, yet it serves its purpose admirably. I recommend you try out National Processing.
- An Extensive Selection of Clover Point-of-Sale Systems
- No long-term commitment, only month-to-month billing
- Discounts for members and those who use exchange-plus pricing
- Processing fees for electronic checks and ACH are low.
- Superior Reputation in Cyberspace
- A viable choice for thrifty shop owners
- “Free” technology may require a lengthy commitment.
- The “free” equipment comes with a hefty early termination cost.
#3. Durango Merchant Services
When it comes to merchant accounts, Durango Merchant Services is the go-to company for high-risk firms, foreign merchants, and even some conventionally low-risk enterprises. Your rates and fees will be determined by factors such as the type of business you run, the level of risk you pose (more risk = higher rates), the number of years you’ve been in operation, the number of transactions you’ve processed, and your credit score. No matter the nature of your company, Durango will always behave with honesty and fairness.
Furthermore, with a perfect 5-star rating, Durango has earned its place among the greatest high-risk merchant account providers on our roster. Merchants operating in high-risk sectors who have been turned down for a merchant account elsewhere should give this firm serious consideration. While we appreciate that this organization is willing to work with low-risk merchants, the lack of transparency regarding pricing, fees, and other terms makes it impossible for us to give an accurate grade.
In addition, if you’re a low-risk merchant thinking about using Durango, we advise you to get a free quote and shop around.
- Places high-risk and other difficult-to-place retailers
- Provides offshore merchant accounts to businesses in certain high-danger sectors.
- Competitive pricing and favorable terms of the agreement
- Most contracts have no penalties for canceling early.
- Customer service with a dedicated account manager
- There is a lack of price information on the site.
#4. Host Merchant Services
HMS, or Host Merchant Services, is a company that facilitates financial transactions. HMS only provides interchange-plus pricing and is honest about the fact that its rates may not be optimal for your company. (It might not be worthwhile for a business processing mobile payments on a very small scale.)
Furthermore, the company is situated in the United States and has a collaboration with Electronic Merchant Systems (EMS), which allows them to accept businesses from select high-risk industries; as a result, we rate them as one of the greatest high-risk merchant account providers and give them 5 stars.
In addition to the abundance of positive testimonials, the fact that HMS has nearly no complaints at the BBB and other consumer review sites is strong evidence in support of the legitimacy of the company’s “service first” claims. Although HMS’ client list may seem small (about 6,000), this is not due to the lack of consumers being served.
With HMS, you can expect first-rate support even if your company has a low transaction volume. That may be really significant.
- An interchange-plus price that is openly shown
- No charges for early cancellation
- Zero application and setup costs
- There are no required minimum payments each month.
- Effective communication with clients
- Effective marketing and web presence.
- Can be pricey for stores that don’t do much business
- Companies only based in the US
#5. Soar Payments
When other merchant account providers turn down a firm, Soar Payments goes to work finding them a card processing home. Soar Payments could be the perfect high-risk credit card processor for your business if you need a lot of different options. Soar is one of the top high-risk merchant services for small businesses, and they earned a spot on our list.
Some businesses have a harder time getting merchant accounts because banks are wary of them due to a high risk of chargebacks, high transaction volumes, or strict rules. If your company has been classified as high-risk, try not to take it personally. If you run an online or MOTO (mail/telephone order) firm, you increase your odds of being labeled as high-risk. This is because the vast majority of your transactions take place online, where fraud is easier to do. Even though you have fewer alternatives now, that’s not bad news.
- Excellent for businesses with a higher risk profile.
- Instantaneous, tailored price estimates
- Electronic submission of applications
- Quick approval process
- Cost-free application
- Exclusively for American companies
- There is no price list on the website.
Why Do You Need a High-Risk Merchant Account?
In order to accept credit card payments, businesses that have a higher risk of fraud or chargebacks, or that fit certain additional criteria, need to open a high-risk merchant account. Some payment processors, for instance, have strict policies against dealing with the cigarette and firearms industries.
What to Consider When Looking for a High-Risk Merchant
There are many choices to consider when looking for a high-risk merchant account. Do your homework before settling on one because it will have long-term consequences for your finances and the amount of time you spend keeping track of transactions.
However, when searching for a high-risk credit card processor, keep the following qualities in mind:
- Modern technical advancements. The payment provider you choose should be up-to-date on industry developments and provide access to an API. The time required for onboarding should be measured in days, not weeks. It’s best to steer clear of high-risk payment processors like these that can’t keep their servers up or provide the technical support your company needs.
- Alternative payment plans. You should feel confident that your provider can adapt to your unique company demands by supporting flexible payment options and customized payment forms.
- Tools to prevent fraud. Look for a merchant account with extra security features like chargeback protection and multifactor authentication, as these are especially important for high-risk accounts, which are more likely to fall victim to fraudulent activity.
- Market dominance. Choosing a high-risk merchant account is a process that might extend beyond the initial application and onboarding phases. Choosing a reliable business safeguards not only your resources but also your precious time.
- A timely response. A single failed sale on your website can soon snowball into a major problem. Pick a service that will be there for you when problems arise and will offer proactive support.
- Costs are transparent. Find out what the costs will be before you commit. You should be able to find the average monthly fee for high-risk credit card processing and merchant accounts on the provider’s website.
The preceding discussion makes it evident that there are dangers inherent to some types of businesses. When it comes to merchants and payment service providers, the term “high risk” might mean different things to different people. Furthermore, despite the relative ease of onboarding with many different payment processors, businesses always run the danger of being cut off without warning.
High-Risk Merchant Account FAQs
How do I get a high-risk merchant account?
Find a supplier that works specifically with businesses that fall under the category of “high risk.” Applications usually involve filling out online, though certain providers may require additional papers. Factors such as your line of work, geographic proximity, and credit score all play a role in the approval process.
What Are High-Risk Merchant Account Fees?
Additional fees and/or levies are applied to high-volume merchants, who are considered high-risk. Fees in this category may be set in accordance with criteria such as the total number of unsuccessful transactions, the total number of account chargebacks, or the total time it takes to process a transaction.
Who Needs a High-Risk Merchant Account?
A high-risk merchant account is necessary for firms that have a low credit score, deal in high-value transactions, or use numerous currencies.
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