What is a high-risk merchant account?
A high-risk merchant account is a specialized credit card processing solution for businesses that operate in industries that are prone to chargebacks, fraud, and regulatory scrutiny.
Why is my business considered high-risk?
There can be many reasons behind the categorization of your business as high risk by payment processes. These factors include high chargeback ratio, the industry type, transaction volume, target markets, credit score, previous account shutdowns, and the business history
What industries are classified as high-risk?
Industries that are generally categorized as high risk by sponsor banks include CBD, adult, online dating, gaming, Forex, and debt collection.
How is a high-risk merchant account different from a standard one?
The key differentiator is that with the high-risk merchant account, merchants pay high fees, have to accept rolling reserves, and the application goes through strict underwriting. The approval process also takes a bit longer when compared to standard accounts.
Who decides whether a business is high-risk or not?
Certain industries have been classified as high risk by card schemes. The payment processors and the acquiring bank also classify merchants based on their risk appetite, industry data, merchants history, and complexity of compliance.
Can a low-risk business become high-risk later?
Absolutely, if a low-risk merchant starts getting a lot of chargebacks and the industry goes through regulatory changes or the merchant shifts the business model, then a low-risk merchant can be categorized as high risk.
Application & Approval Process of High-Risk Merchant Account
What documents are required to apply for a high-risk merchant account?
You should expect to submit a business license, bank statement, photo IDs of the directors, previous processing history, and your website URL for the approval of a merchant account.
How long does the approval process for a high-risk merchant account take?
The approval process for high-risk merchant accounts generally takes between 2 and 7 business days, depending on the documentation provided and the risk profile of the merchant.
What can I do to improve my chances of getting approved?
To improve the chances of your account approval, you must ensure that you implement transparent business practices, prepare complete documentation and maintain a low chargeback ratio.
What factors are reviewed during underwriting?
Underwriters will review your business history, corporate documents, check the owners’ credit, and evaluate your website. They will also check the processing volume, KYC/AML compliance and chargeback ratio.
Can I get approved with poor credit?
Yes, merchants with bad credit scores can potentially get approved for a high-risk merchant account; however, they will have to accept high reserves and fees.
Can a startup apply?
Yes, start-up businesses that have faced rejection from the low-risk processors can apply for high-risk merchant accounts; however, most providers prefer businesses with prior processing history.
Can I apply as a sole proprietor?
You can definitely apply as a sole proprietor; however, your chances will greatly improve if you have an LLC. QuadraPay can help you set up an LLC easily.
What if I don’t have a business website yet?
In most cases, the underwriters will require a business website; however, certain businesses can get merchant accounts without it. Ideally, you should build one during the onboarding process.
Can I change ownership details later?
Yes, merchants can change the ownership and use the same credit card processing account; however, they must inform the payment processor to get prior approval. This will help avoid any downtime.
Fees, Reserves & Pricing For High-Risk Credit Card Processing
Are fees higher for high-risk merchant accounts?
Absolutely, the fees that you pay for a high-risk merchant account are slightly high because of the associated risk and the management cost.
What kind of fees should I expect?
The most common fees that you should expect includes monthly fee, transaction fee, chargeback fee, and sometimes a reserve amount.
Are there hidden fees?
If you work with a transparent payment service provider, then you can ask for a full fee disclosure in writing. This will help you avoid hidden charges.
Is there a rolling reserve? For how long?
Yes, with most of the high-risk merchant accounts, you will have to accept a rolling reserve. This is generally between 5% to 10%, which is held for 3 to 6 months. The reserve helps to protect the payment processor against chargebacks.
How is the reserve amount determined?
The reserve amount or the percentage is calculated on the basis of business risk profile, expected volume and previous history.
Can I negotiate a lower reserve?
Absolutely, you can try to negotiate for a lower risk reserve; however, to do that, you must have a strong processing history.
What happens if I exceed monthly volume?
You must ensure that you do not process over your approved monthly sales volume limit. If that happens some processors may flag or pause your account. If you are expect a spike in transaction, then you should inform the processor.
Can I get my reserve refunded early?
Yes, that is possible; however, the final decision will be of the processor. Merchants that show consistent processing and low disputes can potentially get their reserve refunded early.
What is the policy on high-ticket transactions?
High-ticket credit card transactions are allowed; however, you must disclose this upfront. The approval for high-ticket transactions requires additional scrutiny.
High Risk Payment Processing Technical Integration
What payment methods are supported?
You will be able to accept all types of payment methods, such as credit cards, debit cards, ACH, and crypto.
Can I accept recurring payments/subscriptions/memberships?
Yes, recurring payments for subscription businesses are allowed. It is an ideal payment mode for clubs and SaaS businesses. With recurring payment platform, merchants can effectively perform dunning management and use flexible billing cycles.
Is there a processing volume limit?
Your processing volume limit will depend upon the underwriter’s decision. This limit can be increased based on your risk ratio.
What are the settlement times?
The settlement time frame for high-risk credit card processing is typically 2 to 5 business days.
Can I integrate the gateway with my website or CRM?
The merchant account comes with a detailed API that can be easily integrated into CRM, billing software and website.
Is it compatible with mobile apps?
Yes, the gateway can be integrated into apps by using mobile API and SDK.
Do you offer hosted payment pages?
Yes hosted payment page solution is available. This is beneficial if you do not want to go through complex API integration. You will be able to accept fully compliant payments through the branded hosted payment page.
Is 3D Secure supported?
Yes, our gateway supports 3D secure processing, and it helps in reducing fraud and chargebacks.
Can I send invoices to customers?
Absolutely, you can send invoices to your customers by using the invoicing tool.
Can I change my billing descriptor?
Yes, you can change the billing descriptor. However, you will have to inform the underwriters for approval to avoid confusion.
What are the supported currencies?
Our high-risk payment gateway allows multi-currency transaction. Businesses can accept payments in US dollars, euros, GBP, CAD, and many other currencies. The currency conversion is handled on a real-time FX conversion basis.
High-Risk Processing Security & Compliance
Is PCI-DSS compliance required?
Yes, full compliance with PCI DSS is mandatory for all type of merchants that accept card payments including those operating in high-risk industries.
What fraud prevention tools are used?
Our acquiring partners use a variety of fraud prevention tools, such as 3D Secure, AVS, velocity filters, and IP monitoring.
How do I handle chargebacks?
If you get a chargeback, then you should respond quickly and provide full evidence through the dispute management portal.
Can you help reduce chargebacks?
Yes, we can definitely help you in reducing chargebacks. For this, you will have to use chargeback alert services.
What is KYC/AML compliance?
It is a mandatory process that every payment processor must follow. It helps in identifying and verifying the business as per the industry’s standards.
What if my chargeback ratio is too high?
If your chargeback ratio increases, then the payment processor may put a temporary pause on your account. In case of excessive chargeback, the account may be terminated, and it may also be placed on the MATCH or terminated list.
Can my account be terminated without notice?
In rare cases, the account can be terminated without notice. This usually happens if the merchant violates terms and exceeds the risk threshold. To reduce the risk of account termination, you must take initiative to resolve the chargebacks and disputes quickly.
What are the consequences of getting listed on the MATCH list?
The consequences of being listed on the MATCH database can be serious, and it may restrict you from opening any other account for years.
High -Risk Account Management & Monitoring
What customer support options are available?
Our solutions are powered by some of the finest payment processors, and they offer customer support through multiple channels, including email, live chat, and a ticket system.
Will I get a dedicated account manager?
Dedicated merchant accounts are generally offered to high-volume merchants.
Will I get access to analytics and reporting?
Within the merchant account dashboard you can access analytics and option to download reports.
Can I upgrade to a low-risk account?
Yes, you can upgrade to a low-risk account; however, for that, you will have to present a good processing history and minimum disputes.
Is auto-decline rule setup?
The gateway implements various risk reduction measures, such as declining transactions coming from risky locations or IP addresses or because of card mismatch, and more.
Can I add multiple MIDs in one dashboard?
Yes, by using a specialized payment gateway, you can add multiple merchant IDs in a single dashboard.
Geographic & Industry-Specific Considerations
Do you support US/EU/UK/Canada/Australia & NZ merchants?
Yes, QuadraPay offers the high-risk merchant accounts to businesses registered in all these countries, like us: Canada, the UK, Australia, New Zealand, and the European Union.
Does the merchant account support CBD/hemp businesses?
Yes, our payment solutions are available for CBD and hemp merchants in certain countries.
Do you support businesses in the adult niche?
Yes, we support adult-oriented businesses; however, they must comply with the mandatory regulations.
Can I migrate to your services?
Yes, as our services come to you at low cost, you can certainly migrate to our solutions. Our team will provide you full support in the migration process.
Choosing a High-Risk Processor
What should I look for in a high-risk payment provider?
You should look at how transparent the provider is and what experience that company has in onboarding merchants from high-risk industries. You should also check what kind of fraud reduction tools they have in place. Along with that, you should also check their reviews.
Why choose you over PayPal/Stripe/Square?
While PayPal, Stripe and Square may support some high-risk industries, when you work with us, the support is available to a larger list of high-risk verticals. Our core service is high-risk processing; you can get a dependable solution from us.
Do you have industry experience?
Yes, we are highly experienced in the high-risk credit card processing industry, and we have supported various CBD, gaming, adult, and debt collection merchants across multiple nations.
High-Risk Merchant Account Onboarding Process
Do you offer onboarding training?
Yes, once your account is activated, our team will assist with the integration and give you a walkthrough for the merchant dashboard.
Are sample contracts available?
Yes, we can share the contract with you before you sign the agreement. This will help you to understand the key terms and conditions involved.
How do you stay compliant with card regulations?
Our acquiring partners are some of the most reputed players in the market, and they fully comply with the card schemes’ guidelines, including those of Visa and MasterCard.