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Is the Future of All Small Businesses High Risk Merchant Accounts?

It is an undeniable fact that advancements in technology these days demand the use of credit or debit cards for financial transactions. For business to thrive, cashless payment methods need to be an option as people no longer keep cash in their wallets.

However, that is not as simple as it seems for some businesses. For instance, if your small business lacks the capacity to process online credit card payments, was turned down for processing services, or had your merchant account shut down, then all that you can do is settle for a high-risk merchant account.

How business is categorized as high-risk

  • If you are a terminated merchant or excessive chargebacks caused you to lose your previous merchant processor
  • If you are new in business, with little history of credit card processing
  • If you exist in an industry with high chargeback ratio
  • If you are offering subscription-based products or services
  • If your business uses multi-currency transactions
  • If you have a history of bad credit
  • If you are an international merchant, or one doing business with countries with high chargeback risk

Other products or services flagged as high-risk by processors include:

  • Bitcoins or Forex trading
  • Dating services
  • Online gambling or casinos
  • Pharmaceuticals or drugstores

What a high-risk business means

A high-risk business or industry will face higher rates with additional terms and conditions from credit card processors. This can result from bad credit, excessive chargebacks, industry-wide challenges, poor cash reserves, or volatile revenue.

Having a high-risk designation can result to higher rates, fees, and rolling reserves. Risk factors can only be mitigated by reducing chargebacks and improving communication with the processor to avoid a high-risk designation.

What are high-risk merchant categories

Businesses can be labeled high-risk if they sell expensive items over $500 or if they sell items carrying potentially significant legal risks. Here are industries categorized as high-risk according to credit card processing companies.

  • Adult entertainment
  • Affiliate marketers
  • Antiquities
  • Bail bonding
  • Consumer electronics
  • Credit repair
  • Debt collectors
  • Gambling
  • Legal/law firms
  • Life coaching
  • Pharmaceuticals
  • Rare and collectible cars
  • Telemarketing

If your business is under these industries, then you have a greater chance of acquiring a high-risk category. Moreover, those with cyclical sales or high volume of recurring payments for subscription-based products can also be considered high risk. This is due to the volatility potential of their revenue.

Indeed, you can tell that your small business should settle for a high-risk merchant account in the future if it is among the industries where the risk is high as classified by credit card processors.

What to do if labeled a high-risk business

You can take steps to mitigate the high-risk label of your business and improve your situation.


  • Be transparent with the return and refund policies of your business to your customers
  • Set aside a significant amount of liquid cash on hand
  • Reduce chargebacks by avoiding gimmicks


When labeled as high-risk, you can pick the best credit card processor to help you open a merchant account.


( President )

My interest in the financial world started to blossom in High School. However, my parents tell me I use to watch financial programs before the age of 5. So, I guess I was born with the Financial bug. In high school I was accepted into their Finance Academy, which I attended for 4 years. In addition to graduating high school, I accumulated a substantial amount of financial knowledge few people experience at such a young age. During which time, I won the State of Florida Stock Market Contest and I also finished in the top 100 in the CNBC stock market contest which had over 1 million participants throughout the country (including some of Wall Street’s elites) with a take home prize of $1 million. These achievements allowed me to be invited to many shows and events with top people in their fields of business from around the world.

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