High Risk

Your Guide to High-Risk Merchant Account Fees in 2023

Read Time: 5 min

a business owner assessing high-risk merchant account rates on their merchant statement

Intended to offset the financial exposure associated with servicing high-risk businesses, high-risk merchant account fees are typically more costly than traditional merchant account fees. And these fees are, quite literally, money you’re paying to make money.

As an integral element of payment processing, a merchant account is a specialty bank account through which payments are channeled. Without a merchant account, a business cannot accept credit or debit cards, which currently stand as the most preferred payment method for consumers. However, not all merchant accounts are created equally. As a result, high-risk businesses must obtain high-risk merchant accounts to access the level of payment processing support necessary for their operations.

Below dives deeper into high-risk accounts, their associated fees, and—best of all—how to unlock the lowest possible fees by partnering with a merchant services provider specializing in high-risk business support!

Average High-Risk Merchant Account Rates

Generally, high-risk business owners can expect credit card processing rates of 0.5% to 1% higher than low-risk processing rates, which end up ranging anywhere from 3.49% to 3.95% per transaction on average plus a $0.25 transaction fee. Typically, monthly fees range from $10 to $50.

An Overview of High-Risk Merchant Account Fees

High-risk merchant accounts are designed for businesses at a higher risk of chargebacks, fraud, or other payment processing pitfalls that make it difficult to secure a traditional merchant account. To compensate for the increased exposure to the aforementioned issues, fees for a high-risk merchant account are typically higher than those for a regular merchant account.

The fees associated with a high-risk merchant account vary depending on a number of factors, including the business’s industry, its transaction volume, and its assessed risk level. High-risk accounts may also be subject to fees for chargeback protection, PCI compliance, and other security measures. Additionally, these fees can differ between payment processors.

Why Are Processing Costs Different for High-Risk Merchant Accounts?

Because high-risk businesses present a greater potential liability to merchant account providers, the associated merchant account fees reflect that risk. For example, these types of businesses may have a higher rate of chargebacks, which can be costly for the merchant account provider. To offset this risk, the processor charges more for its services. Additionally, the processor may require more stringent security measures, such as a rolling reserve, to protect itself from potential losses. All of these factors can contribute to the higher fees associated with a high-risk merchant account.

Factors that Classify Your Business as High-Risk for a Merchant Account

Many factors contributing to a high-risk business classification are so common that a business owner may not realize their operation is considered high risk until they attempt to obtain a merchant account. Such factors include:

  • Operations falling within a high-risk industry
  • High transaction volume
  • High average ticket size
  • Likelihood of a high chargeback ratio
  • High possibility for credit card fraud
  • Limited business operating history
  • Low personal or business credit score
a business owner looking at high-risk merchant account fees with a magnifying glass

The Types of Risk Associated with High-Risk Merchants

For high-risk merchant account providers, there are two main types of risk to consider: chargebacks and reputational jeopardy.

blue arrows circling around a dollar sign in a green circle as a chargeback

Risk of Chargebacks

High-risk merchants tend to be more likely to experience chargebacks, which occur when a customer formally disputes a charge on their credit card. For the parties that manage chargebacks—the processor, acquiring bank, and card network—the process can be time-consuming and costly. As a result, these parties aim to avoid servicing businesses likely to incur chargebacks, as the process drains their limited resources.

bank with an orange x-mark on its roof from reputational risk

Bank Reputational Risk

High-risk merchants may pose a reputational risk to potential acquiring banks, as they may be associated with activities or within industries considered controversial or subject to complicated regulations. The reputational risk associated with servicing high-risk merchants can make it more difficult for them to obtain a merchant account.

4 Fees That Fluctuate With Your Risk Level


1. Chargeback Fees

Chargebacks can be costly, typically resulting in the merchant losing the sale and incurring a fee from the payment processor. Chargeback fees vary depending on the risk level of the business. Higher-risk businesses generally incur higher chargeback fees.

Note: Though seemingly similar, chargebacks and refunds are different transactions with different implications for your business.

2. Transaction Rates

The transaction rate is the percentage of each sale that goes to the merchant account provider as a service fee. This rate varies depending on the business’s risk level. Yet again, higher-risk businesses generally incur higher rates.

3. Monthly Fees

Some merchant account providers charge a monthly fee for their services. This fee varies depending on the risk level of the business, and—you guessed it!—higher-risk businesses are subject to higher fees.

4. Rolling Reserves

A rolling reserve is a percentage of each sale withheld by the merchant account provider in a reserve for a period of time. Intended to protect the merchant account provider from the increased financial exposure associated with servicing high-risk businesses, the percentage withheld varies depending on the business’s risk level. The higher risk the business, the larger the required rolling reserve.

4 Fees That Stay Static Regardless of Your Risk Level


1. Refund Fees

If a customer requests a refund, the merchant may be subject to an additional fee from their merchant account provider. Merchants should consider factoring this cost into their pricing strategy to ensure they can provide refunds without falling into the red. Additionally, it’s beneficial for merchants to have policies in place regarding refunds so customers know what to expect when requesting one.


2. PCI Compliance Fees

PCI compliance is a requirement for every merchant accepting credit card payments. It refers to the Payment Card Industry Data Security Standard, an extensive set of guidelines designed to protect consumer financial information and ensure secure transactions. Regarding fees, merchants may pay a PCI non-compliance fee if they fail to meet PCI standards. Additionally, some processors charge a PCI compliance fee to pass down the costs associated with maintaining PCI compliance to the merchant.


3. Security & Chargeback Fees

Merchant account providers often offer security solutions and chargeback protection as additional services, often at an additional cost. However, the cost of providing these services is generally the same for all businesses, regardless of risk levels.


4. Termination Fees

Merchant account providers may charge an early termination fee to cover the costs associated with concluding the contract. Termination fees also compensate the merchant account provider for any potential losses incurred as a result of the early termination of the merchant agreement. Because the cost of terminating a merchant account is about the same for all businesses—regardless of size, industry, or risk level—termination fees are fairly static.

Why Choose PaymentCloud?

Within much of the payments industry, high-risk businesses and higher processing fees are one and the same. As a leading merchant services provider specializing in servicing high-risk businesses, at PaymentCloud, we believe high-risk merchants deserve the same chance to succeed as all other merchants, and processing rates absolutely have an impact on a business’s chance to succeed. Our team of experienced account managers is committed to helping merchants navigate the process of obtaining a high-risk merchant account at the best available rate with no startup fee. Don’t partner with a provider that equates your high-risk business to high processing fees; partner with one that views high risk as high reward!

Unlock low processing rates for your high-risk business with PaymentCloud!

business owner with high-risk merchant account processing fees falling as dollar signs around him


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