Thursday 21 September 2017
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Which Businesses Are Considered High Risk for Merchant Accounts?

Companies may need merchant accounts in order to accept payments via a debit or credit card. The banks and other financial companies that offer these accounts may decline some businesses. This could either because the account issuer considers the type of business or the specific merchant risky to do business with. Since most companies need to take credit and debit card payments to stay in business, it’s possible that a high risk merchant account can offer the right solution.

The Basics of a High Risk Merchant Account

Some businesses in the high risk category may be extremely profitable and well run. There are certain kinds of businesses that just tend to suffer from more chargebacks or fraudulent transactions than other kinds of companies for a variety of reasons.


These are some examples of companies that might not get approved by the strictest merchant account programs:

  • Membership programs with recurring billing
  • Companies that sell future services, like tickets and reservations
  • Businesses with a guarantor who has poor or little credit
  • Companies that have already been blacklisted by other account issuers

Obviously, this list includes many companies that sell online. It might also include businesses that have not had a chance to establish good credit because the company or company’s owner has never relied upon credit much in the past.

The Benefits of a High Risk Merchant Account

It is true that companies in some industries may have a hard time qualifying for a standard merchant account because financial institutions consider them risky. The downside of obtaining an account for high-risk customers is that the service fees and terms will not be as favorable to the business. In some cases, the issuer might even require a reserve in order to protect themselves. At the same time, most businesses find that establishing an account for higher risk customers is better than not having any merchant account at all.

Of course, some companies can user their account to improve their situation. For example, after establishing a good track record with an issuer, it’s certainly possible to ask that issuer to review their fees and terms. It’s also possible to use that good track record to gain acceptance to a program with fairer terms from another issuer.

Business owners who worry that they might get declined because of poor credit or other financial problems should probably contact merchant account issuers before applying. Every application can generate a record of an inquiry, and it won’t help to start generating lots of declines on a credit report. In addition, it’s a waste of time to apply for merchant accounts that aren’t likely to get accepted. There are banks and other financial companies that specialize in high risk accounts, so these might be the best resources to start with.

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