What You Need to Know About High-Risk Merchant Accounts

What You Need to Know About High-Risk Merchant Accounts

Do you own a high-risk business? The answer largely depends on your industry and credit score, but those that are — and accept credit cards — also have high-risk merchant accounts.  

What exactly are high-risk merchant accounts, you ask? Don’t worry; they’re not as scary as they sound… at least not when they’re from the painless merchant processing experts at T1 Payments. Let’s peel back the curtain and examine what high-risk merchant accounts are all about and why T1 Payments is your go-to merchant account provider for highly customized services.

What is a high-risk merchant account? What You Need to Know About High-Risk Merchant Accounts

If you’re among the majority of small businesses in the U.S. to accept credit cards, you probably don’t think too much about the X’s and O’s of credit card transactions. But in order for you to take credit cards as a form of payment, you need a merchant account. The equivalent of a bank account, a merchant account is what allows business owners to take plastic — meaning debit and credit cards — as a form of payment. The merchant account basically holds the funds paid by the customer so the credit card processor can do its thing to assess whether the transaction can be funneled to the merchant’s bank account by the credit card processor or acquiring bank.

High-risk merchant accounts go through this same process; the only difference is their classification. Assigned by credit card processors, high-risk merchants are organizations that are deemed to be potentially dangerous for a credit card issuer to do business with because they are in an industry vulnerable to fraud and high chargebacks. Appropriately named, chargebacks are just that — they’re scenarios in which instead of a charge going into the merchant’s bank account, they wind up going back to the customer’s account due to some type of issue with the purchase itself. However, instead of the funds going all the way back to the customer, they’re held in limbo so all the relevant parties can determine the nature of the problem and the ultimate destination of the funds. 

Bottom-line: Chargebacks cause a lot of headaches and hassle for everyone involved. Being tagged with a high-risk merchant account label often results in higher fees and tighter controls on the amounts that customers can be charged, whether goods and services are sold in person or are selling online. It may also leave you with fewer options in terms of credit card issuers or acquiring banks that will underwrite your business. 

high risk merchant accounts

Why are some businesses defined as high-risk merchants?

“High-risk merchants” is a term coined by the Federal Deposit Insurance Corporation. While any business can be classified as such, certain industries, such as travel and getaway destinations, are more prone to chargebacks and fraud than others. They include:

  • Fantasy sports
  • Membership-based businesses (e.g. health clubs, fitness centers, magazines, etc.)
  • Money transfer
  • Adult entertainment
  • CBD products
  • Vape and e-cigarettes
  • Antiques
  • Pawn shops
  • Health and wellness 
  • Nutraceuticals (e.g. holistic medicine, natural foods, etc.)
  • Airliners
  • Weaponry and ammunition
  • Online dating
  • Lottery
  • Real estate
  • Attorney referral services

If you’re in any one of these industries, it doesn’t automatically label your company as a high-risk business. It just means that the likelihood is greater. High-risk merchant accounts may also be influenced by credit scores, eithers yours or your customers’. Generally speaking, the lower the credit score, the higher interest rates tend to be. Having a low business credit score may also result in more expensive chargeback fees, which cover the administrative aspects of chargeback processes (e.g. dispute, investigation, settlement, etc.). 

How do you get a high-risk merchant account instant approval?

In an era of lightning-fast internet connections and 100% satisfaction guaranteed, you would think that there would be such a thing as automatic approval for a high-risk merchant account. If you’re a high-risk business, you’re highly unlikely to obtain a merchant account instantaneously. And if you see such an offer, you can bet there are strings attached, in the form of outrageous fees and a ludicrous amount of documentation. 

Trust the T1 Payments difference

If you’re a high-risk business and you’ve applied for a high-risk credit card before, you know the process can be painful, whether it’s the waiting, the fees or the limitations you have in finding merchant services that take high-quality customer service as seriously as you do. That’s what makes T1 Payments notably different. Unlike other payment gateways, which may make you feel like you should be the one who’s grateful for them, we’re truly grateful for you. We aim to show you our appreciation in everything that we do, from seamless, hassle-free application and approval, to 24/7 customer support to  virtual terminal solutions. If you have a mail order or telephone order business, T1 Payments offers a virtual terminal that allows you to either manually enter credit card numbers on a piecemeal basis or via the transaction upload feature. This latter option enables you to conduct credit card transactions in bulk. Additionally, with full transaction reporting, you can watch all your credit card transactions as they happen in real time through the T1 Payments gateway. Here, you can customize reports to fit your needs and leverage them by printing them off, downloading them or exporting them to a PDF file. 

T1 Payments provides a comprehensive suite of payment processing and payment gateway services, including global payment processing, which allows you to collect payments in over 160 currencies from all around the world, from euros to pesos, dinar to yen and much, much more. Plus, with electronic invoicing, you’ll get paid faster. 

From hassle-free integrations to live in-house technical support, turn to T1 Payments for customer service you can depend on. To do otherwise is a risk that we’re unwilling to take. Contact us today to learn more. 



“I am happy to say I am very satisfied with the professionalism and quality service for my merchant account. My relationship reps were able to give me a great walk through on what to expect in detail and although my store wasn’t getting much sales internationally, with the guidance they provided to support foreign currencies, I am slowly but steady getting more and more customers from abroad.”

– Needles Hemp Store


Get in touch to discuss a credit card solution to unlock international sales for your high-risk business.

Take the first step by completing our simple application form and hear from one of our knowledgeable dedicated reps who can answer your concerns.