High Risk Merchant Account Providers

Types Of Merchant Accounts We Offer:

Performance Card Service (PCS) provides high risk merchant services for payment processing in the U.S. and offshore. If you are looking for a high risk merchant account with more features and better terms, or are a new business without established credit, PCS will help you identify your best credit card payment options, prepare your application, make the right choice, and implement the system, as well as offer ongoing support to make sure your high risk merchant account services are meeting your expectations. 

Businesses fall into the high risk category for any number of reasons. You need a high risk merchant service provider if any of these conditions apply to your business.

  • You operate in a high risk vertical. Financial institutions consider certain industries to be high risk by nature. These include regulated businesses, industries where chargebacks are higher than average, and where cancellations are higher than average. If your business operates in any of these verticals, or is closely associated with them, you need a high risk account.
  • Your business history or current situation suggests high risk. If you’ve experienced bankruptcy, if you have had credit problems in the past or have been a victim of fraud, or if your business uses recurring billing or the subscription payment model, banks are likely to put your company in the high risk category. Also, if you have just opened a business and have no credit history, you may encounter challenges in securing a merchant account.

Partner with PCS

If you need a merchant account for high risk business, you have come to the right place. For more than 20 years, PCS has helped high risk merchants through the process from start to finish. Our success and staying power in this challenging field are a result of our straightforward and transparent approach to business, our deep understanding of the complexities of high risk accounts and our strong relationships with merchant account providers.


What is a high risk merchant?

Often, a business discovers it is high risk only when it tries to get a merchant account for accepting credit card payments. What was thought to be a routine part of setting up shop, taking credit cards, suddenly becomes a real obstacle for being in business at all. Many issuing banks either decline high risk business applications altogether or accept them with higher-than-average fees and various restrictions that make operating a business quite challenging.

But all is not lost! Our company specializes in helping high risk businesses obtain accounts for credit card processing with the most favorable terms available. Our experience over many years in the business has enabled us to build solid relationships with payment processors that actively seek out high risk merchants and are set up to support them well.

Companies are categorized as high risk by banks for a number of reasons. Here are the most common.

  • Being in a regulated industry. Tobacco, firearms, pharmaceuticals — many such businesses require extra steps and additional procedures to validate customer identity and process transactions. More complex and sensitive transactions put more risk on the issuing bank.
  • Being in an industry with a high rate of chargebacks. Chargebacks, whether initiated by a dissatisfied customer or by the processor or bank due to a procedural or clerical error, cost money and chew up an enormous amount of the bank’s time conducting investigations and arbitration. Some industries, such as hospitality, have a high chargeback rate by nature — people frequently change travel plans, are dissatisfied with accommodations, cancel trips, etc. If you’re in such an industry, you will be deemed high risk.
  • Being an online business. CNP (card not present) transactions are inherently riskier than POS (point of sale) transactions, since there’s no physical way for the seller to “size up” the legitimacy of a customer. Because online businesses are more susceptible to fraudulent transactions, they are usually put in the high risk category.
  • Having high average ticket sales. Big ticket items elevate risk of fraud and also increase the financial hit of a chargeback. Again, the bank has to cover the risk with the higher fees and tighter terms associated with a high risk account.
  • Having bad personal credit. For entrepreneurial businesses in particular, the financial strength of the company depends on the financial strength of the business owner. If you have a bad credit history or unsettled credit account issues, you should clear them up as much as possible before applying for an account.
  • Being a new business. If you have a new business with no credit history, banks will likely assume the worst and put you in a high risk category. In the right circumstances and with the proper documentation, this obstacle is sometimes overcome.
  • Your business is using the recurring billing model. Subscription businesses and other types of recurring billing models are quite popular, but carry a higher-than-average risk of chargebacks (see the second bullet point).
  • You’re doing a lot of international business. Dealing with multiple currencies and accepting orders from individuals or businesses halfway around the world increase transactional complexity and opportunity for fraud — as well as making challenging disputes and arbitrating chargebacks much more difficult.

In summary, if your business experiences a high level of chargebacks, has a higher-than-average vulnerability to fraud, or struggles financially, banks will underwrite your account application with great care before accepting it, if they accept it at all.

If you are in the high risk category and need a more effective payment processing solution, contact us now. We will help you!

What is a high risk merchant account?

Businesses must set up a merchant account to process credit cards and certain other types of digital transactions. It is a type of bank account into which money is deposited by banks after the company accepts credit card orders. Since the bank is fronting the money to the merchant (cardholders typically pay their credit card bills every 30 days), if a transaction falls through, the bank is liable for the full amount if the merchant cannot cover it. Thus, if a merchant has financial issues or is in a business where a greater-than-average number of transactions fall through, a bank may offer a merchant account, but it will be a high risk account.

A high risk account and a standard account have two main differences. First, the high risk account carries higher transaction fees, and probably some will have several additional fees imposed as well. Additional fees, terms and conditions may include early termination fees, increased chargeback fees, longer contract periods, and transaction or volume caps. Second, the high risk account likely requires the merchant to maintain a reserve fund to cover chargebacks as they occur. Reserve funds reduce cashflow and may affect a merchant’s ability to maintain smooth operations.

Both the fees and reserve funds are methods used by a bank to compensate for the higher financial risk of handling the merchant’s credit card orders. Transaction fees for high risk accounts vary widely, depending on the nature and magnitude of each merchant’s level of risk. On the low end, we see fees just under 3%, but they can run higher than 7% for very high risk situations. Reserve funds generally amount to about 5% to 10% of a merchant’s credit card sales over a 180-day period. Funds are set up to be either rolling reserves or a fixed amount.

Merchants are deemed high risk for a variety of reasons. If you are in a regulated industry or an industry that experiences a higher-than-average number of chargebacks, or if your business is highly susceptible to fraud and/or if your business is not on firm financial footing, banks will place you in the high risk category.

High risk businesses may be more common than you would at first imagine. For instance, some online businesses are high risk because they exclusively process CNP (card not present) transactions. CNP transactions are inherently more vulnerable to fraud because no one is physically present during the sale to observe potentially fraudulent behavior or other warning signs. Another large category of high risk is businesses using the recurring billing model. Subscription services have many advantages, but recurring bills increase the likelihood of chargebacks, Customers forget they subscribed, they become disenchanted with the product/service, their cards expire, etc.

If you are in a high risk category and want to set up a merchant account or look for one with better terms, contact us now. Our company specializes in high risk accounts and we will help you find a payment processing solution that works the way you need it to work.

How long does it take to set up a high risk merchant account?

A high risk account takes under five business days to set up if the merchant is ready to go with all documentation and website compliance, and responds to inquiries from underwriting and compliance in a timely manner. The most significant and common obstacle we see with issuing accounts swiftly occurs when the merchant delays the application process by not being ready to move forward, not answering questions or not having access to required documents.

Since we offer several high risk account solutions, merchants may want to weigh all the options before making a decision, adding time to the process. Nevertheless, since different processors have different appetites for high risk accounts, sacrificing some time to compare multiple offers can pay handsome dividends for a business. Even small differences in fees add up to substantial sums if your transaction volume is high. Furthermore, if you obtain an account with significantly better terms — for instance, a lower reserve fund requirement or none at all — you’ll position your business much better for revenue growth and profitability.

One thing to keep in mind when submitting your application is to provide clear and complete information. The more “holes” the bank’s underwriting team has to fill, the longer finalizing their review will take. For high risk enterprises, gathering all the necessary information can be a daunting task, since you may have to go back 5 years into your financial records. And not only will you need business records, but you will also most likely be required to submit personal financial information. This is because when the need arises to cover chargebacks and other losses associated with processing credit card transactions, owners and in some cases board members have liability as well as the business entity itself.

In addition to submitting clear and complete information, supplying accurate information on your merchant account application is also imperative. Sometimes high risk businesses are tempted to gloss over items that they believe reduce their chances of being approved for an account. This is actually the opposite of what will happen. Financial issues such as bankruptcies, liens, delinquent and terminated accounts, and other such red flags are a matter of public record. High risk account underwriters are adept at finding this type of information, so supplying it upfront is much better for you than having the underwriters uncover it on their own. Not only will supplying the information speed up the application process, it also will help reduce the odds of your application being declined.

As specialists in high risk accounts, we assist you from start to finish in the application process. For many high risk startups and even established businesses, knowing where to find the necessary information and how to prepare it are daunting tasks. We have helped clients successfully submit applications thousands of times, and we are intimately familiar with the requirements of all the top domestic and offshore payment processors.

To get your account set up as quickly as possible with the most favorable terms available, please contact us now.

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Credit card payments are essential to sustain your business and propel growth. Don’t let the competition outmaneuver you. Contact PCS now to discuss how we will assist you.

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