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What is High-Risk Merchant Account & Processing?

Businesses require merchant accounts to process credit and debit card transactions. There are several types of merchant accounts—some are considered low-risk while others are high-risk. For example, a bank or credit card processing service provider might consider a business high-risk due to increased regulations or potential monetary loss. 

Contrary to how it sounds, “high-risk” isn’t necessarily bad. Usually, it simply refers to the type of goods and services a merchant is selling or the industry they do business in. Additionally, “high risk” is a category generally reserved for credit card processing where card-not-present transactions are the norm, like eCommerce websites. High-risk businesses typically face higher credit card processing costs because, often, what they sell is considered riskier than other goods and services in the eyes of banks. 

Learn more about the type of merchant account your business needs and how different credit card processing options work below. 

What is a High-Risk Merchant Account?

A high-risk merchant account is a type of business that banks consider to be high-risk for credit card payment processing. When business owners apply for a merchant account, it is evaluated to determine the chances it could become a financial liability for payment processors. If your business seems safe, i.e., it isn’t likely to cause increased scrutiny or financial loss for the bank or processor, you are considered a low-risk merchant

Merchants are considered high-risk for credit card processing based on various factors, including their credit, pricing of the products and services they sell, the method/methods of sales, volume of sales, and more. In addition, accounts that are prone to chargebacks or sell restricted products are also considered high-risk. 

Credit card processing services, banks, and brands don’t have a universal definition of what it means to be a high-risk business. Instead, they each have their own set of criteria, which can vary greatly. However, common factors among all high-risk companies include being more likely to be presented with chargebacks or refund requests, out of compliance or at risk of being out of compliance with their country or state’s security regulations or doing business in an industry with a high employee turnover rate. 

What other factors contribute to potential risk?

There is no universal definition of high-risk for merchant accounts. The system used to classify it is subject to change based on the credit card processing services, the banks, and more. Usually, there are multiple factors influencing whether a bank considers you high-risk. Most high-risk merchant account providers consider the following characteristics or offerings:

  • New business
  • Poor credit score
  • Annual or long-term contracts
  • Recurring sales or subscription sales
  • Free trials or introductory offers
  • Sales in high-risk countries
  • History of bankruptcy or fraud
  • Card-not-present transactions
  • Processing history of high returns, chargeback fees, etc.
  • Products that might be illegal in certain areas or countries
  • Low-quality customer support

Some common examples of high-risk businesses include:

  • Digital currency exchange
  • Tobacco, vape and e-cigarettes
  • Accounting and taxes
  • Adult merchandise and services
  • Antiques / Pawn Shops
  • Multilevel marketing businesses (MLM)
  • High volume sales
  • Low sales volume
  • Startups
  • Virtual terminals
  • Coupons or Rewards-Points Programs
  • Debt Collection
  • Ebooks
  • Gambling and casinos
  • Furniture stores
  • Gyms and Fitness
  • Health and Beauty
  • CBD supplements
  • Nutraceuticals
  • Lotteries
  • Medical Supplies
  • Transportation Companies
  • Modeling and talent agencies
  • Non-profits
  • Pharmaceuticals
  • Pet products
  • Real estate
  • Fantasy sports
  • Telemarketers
  • Travel services and agencies
  • Web design

It may sound like the odds are stacked against you if a bank or credit card processor determines that you are a high-risk merchant account. But, it’s important to remember that being deemed higher risk doesn’t disqualify you from working with a payment gateway or reflect poorly on you or your small business. There are thousands of high-risk merchants with excellent credit scores, spotless reputations, steady revenue, and secure savings. 

What to Expect as a High-Risk Merchant

Knowing what that means for your business is essential if you have gone through the application process and been deemed a high-risk merchant account. Credit card processing companies consider you high-risk because you have poor credit (business or personal credit), an increased risk of fraud, or some other reason, and typically charge higher-than-normal fees to compensate for the risk. This helps the payment processor cover the possibility of any financial losses, higher regulatory oversight, and more.

High-risk merchant accounts will often be subject to higher:

  • Processing fees
  • Annual fees
  • Monthly fees
  • Chargeback fees
  • Risk monitoring fees
  • Early termination fees

If you have been told you are (or will need) a high-risk merchant account, you can improve your application beforehand to increase your chances of being accepted.

The Solution

Whether you operate a high-risk business or have credit issues, LOLA POS.’s high-risk merchant account experts are dedicated to your business—after all, We Work For You® to get your merchant account approved today! In addition, our specialized account maintenance helps ensure longevity.

LOLA POS. is one of the best high-risk merchant account solutions for various business types. Our credit card processing solutions can save your business a lot of money while helping you process and receive deposited funds quicker than other processors. Through strategic partnerships, we can provide your business with the best merchant account options available. This helps increase your bottom line and aids in chargeback prevention, credit repair, and more. LOLA POS. values your business and your business to continuously produce efficiency and increase profitability.


LOLA POS. is a merchant advocacy group dedicated to reducing the unnecessary fees associated with accepting credit card payments. Since 2004, they have delivered tailored payment processing solutions and best-in-class merchant service and support for all levels of risk. Whether it’s high-risk or low-risk, brick-and-mortar or e-commerce, LOLA POS. will create the best processing experience for your business. For more information, visit www.lolapos.com or call (866) 509-7199.

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