Tailored Pay: What is a High-Risk Merchant Account?

High-Risk Merchant Account

The ability to accept credit cards is a deciding factor in determining the success or failure of a business. Customers greatly enjoy the convenience that credit card brings and often refuse to do business with companies who don’t provide an easy way to pay with credit. This situation poses a huge problem for any business model or company that is considered high-risk by the merchant account industry. High-risk merchants find it more challenging to find and maintain merchant accounts due to higher levels of risk. This is where Tailored Pay comes in. 

Tailored Pay assists businesses in getting a high-risk merchant account in the easiest and most convenient way. But before you go and decide to get a high-risk merchant account, let’s get learn the basics first. 

What are High-Risk Business Industries Considered Unsafe by Credit Card Processing Companies?

Below are some high-risk merchants that credit card companies try to avoid due to excessive fraud and high chargeback ratios. This list may not be complete but will give you an idea of the industries considered unsafe. 

  • Advertising services
  • Beauty, skincare, and hair care
  • Alcohol
  • Airline, travel, logding
  • File sharing
  • Dating services
  • Auto warranties
  • Background checks
  • Drugs and drug products
  • Affiliate marketing
  • Cannabis
  • CBD oil
  • E-wallets
  • Antique coins and collectibles
  • Computer sales
  • Cryptocurrencies
  • Debt collection and debt management
  • Auto sales
  • Business opportunities
  • Domain registration
  • Events and tickets
  • Fantasy sports
  • Charities
  • Firearms
  • Forex
  • Credit repair and monitoring
  • Furniture sales
  • Gambling
  • jewelry
  • Government grants
  • Insurance
  • High ticket coaching
  • Money transfer
  • Health 
  • Payday loans
  • Male enhancement
  • Online auctions
  • Moving services
  • ISPs and web hosting
  • Penny auctions
  • Merchant aggregators
  • Phone unlocking services
  • Marketing
  • Ticket brokers
  • Monthly memberships
  • VPN services
  • Moving services
  • Software and apps
  • Software downloads
  • Nutritional supplements
  • Tobacco
  • Vape/ E-cig
  • Self-storage
  • Pawn shops
  • Timeshares and holiday clubs
  • Web design and SEO services
  • Subscription boxes
  • Tech support
  • Prepaid phone cards
  • Pet sales and accessories

What Kind of Options do High-Risk Merchants Have? 

Fortunately, being classified as ‘high-risk’ will not stop any company from doing business. There are individual merchant accounts created specifically for these industries. However, these accounts tend to charge more processing fees to balance out the risk. But most merchants can add those fees into their pricing models, so it’s not really a hard challenge to overcome.

Not All High-Risk Merchant Accounts are Equal

Because high-risk merchants carry higher risks, there are plenty of bad deals out there for them. Some of the terms are so strict and the fees so exorbitant that the costs are simply unworkable. Some merchant account providers are only looking to make a quick buck from these accounts, and it shows in their terms. But there are companies that specialize in this profitable industry and treat their customers like partners. 

Do You Qualify as a High-Risk Merchant?

Deciding whether a business is fits in a high-risk category is a black and white proposition. If the industry classification you operate in appears to be high-risk, you’ll need to apply for a high-risk merchant account as your own feasible course of action.

Chargeback and Fraud Orders Will Be an Issue

Businesses with high chargebacks and many fraud issues are automatically placed under the high-risk category. This is decided by the company based on the pattern for customers within the industry, including yours. If customers reveal a propensity to place illegal or fraudulent orders or issue chargebacks, the merchant provider will demand additional income and assurance coming from a high-risk merchant account.

Offshore Businesses with Markets in the USA

Offshore businesses looking to infiltrate the U.S. market may come across some issues. The problem is rooted mainly in the banking laws of the country of origin. If they are not in tune with the requirements of the merchant account provider, the account will be labeled high-risk. 

Red Flags Will be Raised from Questionable Legality

When a product or service’s legality is uncertain, the account will become risky. Some products are legal in certain areas, but not in others. Companies that operate in the ‘grey area’ need to look for providers that are in line with their needs. If they choose a company that changes their mind later on, it could interfere with operations.

Poor Personal Credit Raises Red Flags

Most credit card processors usually place people with poor personal credit scores under high-risk categories. Their reasoning is that the particular credit will significantly affect the business, thus requiring higher fees to guarantee safety. It’s worth looking around for owners who find themselves in this situation. They may be able to strike better deals, which doesn’t put them in the same regard as their credit scores. 

Higher Ticket Items May Pose Problem

Businesses that sell higher ticket items run the risk of being placed in the high-risk category. B2B companies that sell extensive contract services might also have the same issues. In addition, companies that often sell items at a higher value than their average ticket could also raise a red flag. The merchant provider might demand more information to make sure the company complies with its terms. Huge chargebacks in the historical activity department might need explanation and documentation.

Most businesses can qualify for some credit card processing, even if they are initially placed in a riskier category. Remember, they can always work their way up to a higher status by submitting legitimate revenues without unwarranted incidents from the customers. In essence, avoiding fraudulent orders and chargebacks is going to pose a huge challenge. Both indicate bad service and poor product quality and may cause a provider to cease operations if the numbers head to the wrong direction. 


If you’re a business owner and your business has been considered high-risk or hard to place, why not seek assistance from Tailored Pay? Tailored Pay is focused primarily in high-risk card processing services for a broad range of industries. With its large global network of banking and processing partners, they provide a streamlined service for hard-to-place businesses. If your application was rejected by other banks, fret not! Get in touch with them today and see your business grow and thrive!