How Does A High-Risk Credit Card Processing Merchant Account Work?

Owning a business in a world that is regularly evolving is not an easy task. The business arena is constantly experiencing changes, and there is consistently present competitiveness among the business owners. Several familiar businesses might face failure due to many reasons. One often sees how easily an organization may become irrelevant due to its inability to adapt to the changing business scenario. Failure to pay attention to the current industry trends and fulfilling customer demands may also contribute to the downfall of a business.

When a company experiences a deterioration in its profit margins, they start searching for alternative ways to achieve its goals without compromising profit. As a result, most organizations experience a strategic drift, leading them to change their domain and area of business. Often these businesses find themselves in high-risk industries due to the drifting. In such a scenario, they require the services of a high risk credit card processing merchant account. Hence, knowing more about these accounts is essential for any business owner.

What Is A High-Risk Credit Card Processing Merchant Account?

What Is A High-Risk Credit Card Processing Merchant Account?

A business falls under the high-risk category if it has higher chargebacks, chances of financial risks, frauds, or a higher volume of returns. The payment processors label them as high-risk based on these factors. They can also categorize the business to be high-risk if the merchant is new in the market and has no payments processed before. Due to the chances of fraud, high-risk merchants have to pay higher processing fees.

To own a high-risk business, one must have a high-risk merchant account to handle all the transactions. Some financial institutions offer their service to high-risk merchants. They act as a medium between the merchant and the clients and ensure fully secured transactions.

How Does A High-Risk Credit Card Processing Merchant Account Work?

Before a business owner applies for a high-risk merchant account, they must know the terms and conditions that make their business differ from others. A high-risk credit card processing merchant account is different from regular accounts in their way of functioning. These accounts have several features that define how they work. Most of these accounts go through the following processes before processing the business payments successfully.

  • Requiring Higher Payment Processing Fees

The payment processing fee for a transaction of a standard low-risk account is lesser than the high-risk merchant account. Usually, the payments of high-risk merchant accounts require several processing methods before sanctioning. Therefore, the chances of fraud and financial loss are higher in this case, unlike the standard ones.

  • A Lengthy Application Process

Opening a standard low-risk business account is easy. There are very few steps and may get approved within a few minutes or hours. On the other hand, it takes multiple days to get the approval of a high-risk merchant account. There are some criteria and procedures that high-risk business owners need to fulfill to open a high-risk merchant account. The payment processors ask the business owners to share detailed information about their business, like bank statements and personal credits.

  • Requirements For An Appropriate Cash Reserve

The payment processors obtain a specific amount from the business owners as a security deposit.

Capped Reserve: The payment processors acquire a percentage of the amount from each transaction until the balance reaches a predetermined threshold. At this point, the contributions stop, and the fund stays until required.

Rolling Reserve: The payment processors keep a percentage from the amount of every transaction aside, and the business owner receives it later.

Upfront Reserve: The high-risk business owner sends the payment processor a certain amount as general reserve.

  • Additional Technical Eligibility

Sometimes the high-risk business owner might sell products or services that may be illegal for people of a specific age group. In such a case, the payment processor asks for some documents that ensure they are not selling them to underage customers.

Additional Technical Eligibility

Some Providers Of High-Risk Credit Card Processing Merchant Account

Some of the best high-risk credit card processing merchant account providers are as follows:

UBC is a highly-trusted industry-leader in credit card processing. With unbeatable pricing offers and rates and a wide variety of payment processing services and acceptance services, they process over 110,000 merchants nationwide. They use the latest technology and equipment in credit transaction processing equipment to handle credit card, debit card, EBT, gift card, ATM and checks.

  • Easy Pay Direct

Easy Pay Direct primarily delivers its proprietary EPD Gateway. Along with it, they also provide most of the necessary services required from a payment processor. As usual, the processing rates and fees are high, but their quality of service under the circumstances makes up for it.

  • Shark Processing LLC

It is another well-known provider of high-risk credit card processing merchant accounts. They are a relatively new player in the market and already have a good reputation for providing world-class services to high-risk businesses. They are known for fast approvals, no additional setup fees, and protection against chargebacks and frauds. Along with these, they also provide online shopping carts, payment gateways, and virtual terminals.


Business owners follow several steps to obtain a working high-risk credit card processing merchant account. First, most business owners must find a reliable payment processor that searches for a banking partner for the merchant account instead of applying for an account directly.

Next, computer-based tools assess the application of such information to make a decision, following which document procurement happens. Finally, these documents help open the merchant account once the business approves. The several steps are essential for both the processors and the organization.

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