What is a High-Risk Merchant Account + The Best Providers in 2025

You might not be a high-risk seller, but it's smart to know what happens if too many chargebacks lead to this label. It’s always best practice to prepare yourself.

I’ll explain the following:

• What high-risk merchants are
• What steps to take if you're labeled as one
• How to find a payment processor that works with high-risk sellers

Let’s start with the basics.

Key Takeaways

• Processors consider 90% of online merchants as high-risk.
• High-risk accounts often come with fees like 2.5% – 5.0% transaction rates and rolling reserves.
• Chargeback rates over 1% can lead to a high-risk label by most processors.
• High-risk processors usually need detailed applications, including financial records and operational policies.
• International transactions carry more risk due to card-not-present fraud and higher chargeback rates.

Many merchants are labeled high-risk because of high chargeback rates. One way to reduce these rates is by using chargeback alerts. We offer these alerts.

Learn how they work.

What is a High-Risk Merchant Account?

A high-risk merchant account is an account made for businesses with higher financial risks. Processors offer these accounts to help such businesses accept credit and debit card payments.

Why are these accounts needed? Some businesses come with risks that many payment providers won’t take on.

These risks include many chargebacks, strict regulations, or large payments. For example, businesses like adult entertainment or international e-commerce often need these accounts.

We’ll dive into the reasons in a second.

Unlike standard merchant accounts, high-risk accounts come with specific features:

• Stricter requirements: They may judge your financial history and operations in detail.
• Higher costs: You’ll likely pay higher fees and setup costs.
• Specialized contracts: Terms might include rolling reserves or delayed payouts.

There’s no universal rule for what defines "high-risk."

Each payment processor or bank sets its own criteria. One provider might decline a business, while another accepts it but adjusts the terms.

For many businesses, high-risk merchant accounts are the only way to process card payments. Without them, they couldn’t operate.

Now. What makes you “high-risk”?

Summary: Specialized accounts for businesses prone to chargebacks or financial risk.

Reasons You May Be Considered “High-Risk”

Here’s why payment processors might label you as "high-risk":

• High chargeback rate: Frequent chargebacks suggest financial issues.
• Industry: Your business operates in industries known for high-risk transactions.
• Location: Your location has higher rates of payment fraud.
• Monetization model: You use models with irregular revenue.
• Average sales: Your monthly transaction volume exceeds standard limits.

Each processor may define “high-risk” differently. But these are common factors most will evaluate.

Next, we’ll explore these reasons in detail.

Let’s begin with our specialty. Chargebacks.

1. High Chargeback Rate

One of the fastest ways to be labeled "high-risk" is having a high chargeback rate.

Most payment processors or card issuers see a chargeback ratio above 1% as a problem. Some are even stricter, flagging merchants at 0.9% or lower.

Why does this matter?

A high chargeback rate signals potential fraud, instability, or unhappy customers. For processors, it’s risky. Such a rate means processors must handle disputes, issue refunds, and pay penalties to card networks like Visa.

We provide more information on chargeback ratios in a separate piece.

Over time, too many chargebacks can result in increased monitoring or even account termination. Worst case? You end up on the MATCH list — a merchant blacklist.

What even is a chargeback?

A chargeback happens when a customer disputes a transaction with their card issuer and requests a refund.

The powers that be designed disputes to protect against fraud. Though, many other issues can trigger them, such as:

• Fraud: Stolen card use or identity theft.
• Friendly fraud: Customers dispute legitimate purchases.
• Merchant error: Wrong charges, undelivered products, or other issues.

You’ll want to prevent these.

Tools like chargeback alerts can help. These alerts notify you when a customer disputes a charge, Letting you resolve it before it escalates. We offer chargeback alert solutions for businesses of all sizes.

For a deeper dive into chargeback prevention, check out our detailed guide.

And how do you know your chargeback rate?

Most payment processors also provide tools to monitor your chargeback ratio. Log in to your merchant portal or contact their support team for help.

What if you have an acceptable dispute rate?

Summary: High chargeback rates signal risk. Prevention tools like alerts help manage disputes.

2. Your Industry

Processors classify around 90% of online merchants as high-risk [1]. This makes your industry a key factor when applying for a merchant account.

Providers flag certain industries due to factors like:

• Fraud risk
• Regulatory issues
• Financial instability
• Chargeback rates

Some of the most commonly flagged high-risk industries include:

They can tell whether you deal in one of your industries based on your merchant category code (MCC). For instance, MCC 5993 tells a processor you sell tobacco and other similar products. Labeling you as high-risk.

Okay. Why are these flagged as high-risk?

Subscription services often experience chargebacks from customers who forget about recurring payments. Meanwhile, industries like travel face disputes over cancellations or delays. As a traveler, I’ve dealt with many of these.

E-commerce stores are at higher risk of fraud because there are no in-person transactions. As of 2023, 73% of losses from fraud come from card-not-present purchases [2].

But being labeled high-risk isn’t just about your industry. Other factors can play a role too. Let’s explore those next.

3. Geographical Location

Merchants in or serving areas like Southeast Asia or parts of Eastern Europe often face extra scrutiny. These regions report more fraud and chargebacks, especially with cross-border transactions.

Low-risk countries include:

• United States
• Japan
• Australia
• Canada
• Some European countries

Additionally:

All international purchases are card-not-present (CNP) transactions. These sales carry more risk than in-person payments. Without the physical card, it’s easier for fraudsters to use stolen details. For instance, EMV bypass cloning.

Such fraud leads to more disputes.

Other factors include:

• Currency conversion risks
• Consumer protection laws (which vary by region)
• Cultural shopping behaviors

But location isn’t the only concern. Your sales model might also lead processors to classify you as high-risk. Let’s break that down next.

4. Monetization Model

Processors watch monetization models to spot potential issues like inconsistent revenue. Some models are more likely to cause chargebacks or raise fraud concerns. Making them higher risk to providers.

Here are some examples of monetization models that might be considered high-risk:

• Recurring subscriptions: Monthly charges for services.
• High-ticket sales: Selling expensive items, such as luxury electronics.
• Freemium upselling: Offering free products with optional paid upgrades.
• Affiliate marketing: Earning commissions from third-party sales.
• Crowdfunding campaigns: Collecting funds for projects with delayed delivery.
• Event ticketing: Selling tickets for concerts, conferences, or travel.

You could have a low-risk model, but have too high of sales.

5. Average Monthly Sales

Payment processors often see businesses with high sales volumes as riskier. Why? Because large-scale operations pose greater financial risks if chargebacks occur.

For example, a merchant processing over $100,000 per month might raise concerns. Processors worry about high operational errors affecting many transactions.

Low-volume businesses face less scrutiny. However. Irregular sales patterns can still trigger flags.

Examples include:

• Inconsistent monthly revenue.
• Sudden sales spikes.
• A history of disputes.

Understanding why your business is classified as high-risk is just the first step. Next, we’ll cover how to navigate these challenges.

What To Do If You’re a High-Risk Merchant

Start by looking for high-risk payment processors that specialize in your industry. These providers understand the challenges you face and often offer tools like chargeback management and fraud prevention systems.

Next:

Prepare strong documentation to support your application. This includes financial statements, a history of resolving disputes, and clear operational policies.

A well-documented application increases your chances of approval. It shows that your business is reliable and prepared.

You should also implement proactive measures to reduce risks. Use tools like chargeback alerts to monitor and resolve disputes quickly. Strengthen fraud prevention by using advanced verification and screening methods.

Additionally. Maintain open communication with your payment processor to address concerns before they escalate.

That’s out of the way. You’ll now want to find a high-risk processor.

5 High-Risk Merchant Processors to Consider

I combined my research and some high-risk gateways found on Forbes’ top high-risk merchant processor list.

Enjoy.

1. Payment Cloud

• Fees: 
  
  • Subscription: $25/mo
  • Transaction: As low as 2%
  • Early termination: $0
• Industries: All legal industries

PaymentCloud is a great option for small high-risk businesses seeking affordable solutions. With a 98% approval rate, it’s one of the most accessible providers for new high-risk merchants.

It also integrates with popular platforms like Shopify and WooCommerce. Making it easy to use for most merchants.

PaymentCloud charges a monthly payment gateway fee and isn’t fully transparent about its overall fees. Such issues could be a concern for some businesses.

2. Durango Merchant Services

• Fees: Not listed
• Industries: Travel, fantasy sports, international sellers, and supplements

Durango is a strong choice for merchants targeting specific industries. Offering flexible fee structures and dedicated account managers.

However:

They don’t list their fees online. You’ll need to negotiate terms. If you’re comfortable with that, Durango could be an excellent option.

One standout feature is their ability to process cryptocurrency payments. Adding more flexibility for your customers.

3. Host Merchant Services

• Fees: 
  
  • Subscription: $0
  • Transaction: As low as 0.20% plus 9 cents
  • Early termination: $0
• Industries: Travel, gambling, adult novelties, debt collection and recovery, and more

Host Merchant Services is ideal for businesses that want to avoid account fees or long-term contracts. It’s best suited for merchants processing over $10,000 in monthly sales to maximize its benefits.

But. Their transaction fees for e-commerce can be high, reaching up to 0.35% plus 10 cents per transaction. This may add up for businesses with smaller margins.

4. Bankful

• Fees: 
  
  • Subscription: $0 – 95/mo
  • Transaction: As low as 0.60% + $0.10
  • Early termination: $0
• Industries: Travel, BNPL, smoking accessories, subscription-based services, travel, and gambling

Bankful is a solid choice for folks looking to process crypto payments alongside other features. It allows options like "buy now, pay later" and provides chargeback alerts. However. Access to these features depends on the pricing tier you select.

One major downside is the cost of their chargeback alerts, which is $45 per alert in the $95-a-month tier. Much higher than what most resellers (like us) charge.

That said, Bankful does offer a wide range of tools for merchants. Making it a versatile option despite the higher costs.

5. Authorize.net

• Fees:
  
  • Subscription: $25/mo
  • Transaction: As low as 2.9% + $0.30
  • Early termination: $0
• Industries: Legal smoking accessories, CBD, and other legal industries

Authorize.Net is a great option for merchants seeking versatile payment solutions. It supports PayPal, Apple Pay, and international payments. Making it ideal for businesses looking to expand globally or offer flexible checkout experiences.

Its robust features and seamless integration add to its appeal.

Now you’ve explored some options. Let’s discuss what to consider when choosing a provider.

10 Factors to Consider When Looking for a High-Risk Provider

Each provider offers different benefits and challenges. It’s important to gauge them against several key criteria.

We’ll discuss those now.

1. Integration Capabilities

The processor should integrate with your systems. These include e-commerce platforms, accounting software, and CRMs. Poor integration can disrupt operations and lead to extra costs for custom solutions.

Always check compatibility upfront.

2. Rolling Reserves

Most high-risk accounts require rolling reserves to cover chargebacks. Since reserve terms vary, understanding these policies is critical for managing cash flow.

Learn more about rolling reserves in a different guide.

3. Specialization in Your Industry

Providers with experience in your industry can address your specific risks and needs. For example, processors familiar with subscription models are better for managing related disputes.

4. Transparent Fee Structure

High-risk accounts often come with higher fees for setup, processing, and chargeback management.

Choose a provider with clear, upfront pricing to avoid unexpected costs.

5. Flexible Contract Terms

Look for processors offering the following:

• Short-term agreements
• Month-to-month options
• Renegotiation opportunities

Such options allow the processor to adapt as your business grows.

6. Reputation

Check online reviews, testimonials, and case studies to assess their performance. Reputable providers are less likely to impose restrictions or end accounts unexpectedly.

7. Security Measures

Look for providers offering fraud prevention tools, PCI compliance, and encryption protocols. Strong security protects customer data and reduces chargebacks and fraud-related losses.

8. Customer Support

Disputes and technical issues can arise anytime. Ensure the provider offers 24/7 support to handle urgent problems quickly.

9. Payment Gateway Compatibility

The processor’s payment gateway should support the payment methods your customers use most. For instance, credit cards, e-wallets, or alternative options. Compatibility ensures smoother, hassle-free transactions.

10. International Transaction Support

For global businesses, multi-currency processing and fraud prevention for cross-border transactions are vital. Choose a provider experienced in managing international sales to avoid issues.

Here’s some of what you’ll experience when signing up for these accounts.

What Should I Expect With a High-Risk Merchant Account?

High-risk merchant accounts differ from standard ones in requirements, costs, and challenges. Knowing what to expect can help you prepare and manage potential obstacles.

From applying to handling the unique difficulties of high-risk businesses, there are a few key areas you need to focus on.

The following sections will cover:

• Application process: What to expect, the documentation you’ll need, and tips for improving approval chances.
• Common challenges: Higher fees, stricter terms, and other hurdles high-risk accounts often face.

Let’s start with the application process.

1. Application Process for High-Risk Merchant Accounts

Applying for a high-risk merchant account requires more preparation than a standard account. Payment processors will review your financial health, industry, and operational practices to determine your risk level.

Expect to provide documentation, including:

• Bank statements and financial reports.
• A valid government-issued ID.
• A detailed business model or website details.
• Processing history, if available.

Processors may also assess your chargeback rate, refund policies, and compliance with industry regulations. To improve your chances of approval, present clear and well-organized documentation.

Once you’re approved — congratulations. But now comes the hard part: navigating the challenges of managing a high-risk account.

2. Common Challenges Faced by High-Risk Merchants

Here are some of the challenges you may find:

• Higher fees: Larger processing and chargeback fees.
• Stricter contract terms: Rolling reserves, longer payouts, and termination fees.
• Reputational challenges: Difficulty securing partnerships.
• Increased scrutiny: Risk of account freezes or termination.

Chargeback fees are one of the biggest costs for high-risk merchants, often ranging from $25 to $100 per dispute. These fees cover administrative handling and act as a deterrent for excessive disputes.

For a detailed breakdown, refer to our guide on chargeback fees.

Stricter contract terms, like rolling reserves, can also hurt cash flow. Processors may hold back 5% – 10% of your transactions for up to 90 days to protect against financial risks.

This can make managing daily operations more challenging.

Reputational challenges also come up when some partners refuse to work with high-risk businesses.

Finally, increased scrutiny means processors will monitor your account activity. Failure to follow terms or address red flags can result in account freezes or termination. One of our customers almost lost access to their Stripe account due to a high chargeback rate.

Now that you know the challenges, let’s look at strategies to cut these risks.

How to Mitigate These Risks

To manage risks, start by reducing chargebacks using tools like chargeback alerts and fraud detection systems. We have a separate guide that dives deeper into chargeback prevention.

Build a strong relationship with your payment processor by meeting compliance requirements and providing transparent documentation. This can reduce the chances of account freezes or terminations.

Stricter terms, like rolling reserves, can strain cash flow, so it’s essential to plan ahead. Maintain a healthy cash flow and budget for higher fees to stay financially stable.

How do high-risk processors differ from standard ones? Let’s take a closer look.

High-Risk Processors vs. Normal Gateways

Here’s a quick breakdown of the differences:

• Approval process: High-risk processors perform detailed reviews. Including your financial history, industry classification, and risk mitigation strategies.
• Contract terms: They often enforce stricter conditions, like longer payout schedules.
• Industries served: High-risk processors cater to businesses flagged for higher risks, such as CBD.

We’ve already covered the fee differences between high-risk and standard gateways.

Now, let’s move on to the pros and cons of high-risk accounts.

Pros & Cons of High-Risk Accounts

Pros:

• Access to payment processing for businesses rejected by standard gateways.
• Support for high-risk industries ensures tailored services and expertise.
• Enables businesses to process international transactions.

Cons:

• Higher fees strain budgets.
• Stricter terms can impact cash flow stability.
• Limited options.

For many high-risk businesses, these processors provide a crucial lifeline. Allowing them to accept card payments when standard options aren’t available.

However…

The fees can add up quickly, especially for businesses with slim profit margins. Rolling reserves further reduce accessible funds, creating more financial challenges.

There’s not anything else to cover.

Conclusion

High-risk merchant accounts can be expensive, but for some sellers, they’re the only option.

If you’re labeled high-risk due to too many disputes, create a chargeback management plan. If your chargeback rate is close to 1%, chargeback alerts should be part of your strategy.

Our chargeback alerts have helped some merchants lower dispute rates by up to 91%.

Take a look.

Sources

• [1] 90% of Online Merchants Are High-Risk. DirectPayNet. 5/4/2022.
• [2] CNP fraud to make up 73% of… eMarketer. 1/23/2023.