A Guide to High-Risk Credit Card Processing and Startups

Most startup companies nowadays need credit cards to process payments. If you are a high-risk merchant, finding the proper merchant account provider is more challenging than it is for any other kind of business. It is here that high-risk credit card processing comes into play.

High Risk Credit Card Processing Guide
High-Risk Credit Card Processing Guide

Image Source- pixabay

This article examines why a startup company may be called high-risk and how to effectively assess merchant services startup companies that cater to high-risk firms. Whether you’re not sure if your company is classified as high-risk, or if you’re not sure how to assess high-risk account providers, keep reading!

How Can Startups Avail High-risk Payment Processors?

If your business is at a high risk of fraud or chargebacks from the processor, you need a high-risk payment processor. The type of the company, the owner’s business and credit history, and other variables may be considered in this evaluation. Because each processor makes its own decisions regarding high-risk businesses, a startup may be rated high-risk by one processor but not by another. Credit card processing may be complex in high-risk startup companies such as:

  • Alcoholic beverages
  • Automobiles
  • Cannabidiol (CBD) and Marijuana
  • Gambling and other forms of internet gaming
  • Firearms and ammunition
  • Jewelry sellers
  • Medicaments
  • Entertainment
  • Various types of loans
  • Cigarettes and vaping devices
  • Travel and Reservations

A variety of characteristics about your organization and how it runs might be possible factors in determining if you are a high-risk firm. The riskier your startup, the less likely it will be authorized as a processing partner. That is why you must understand how you are assessed in the first place.

How to Select a Trustworthy High-risk Payment Processor?

If you’ve been classified as a high-risk merchant or fear you could be one, the following advice should help you discover a merchant account that accepts your company and fits your needs:

1. Examine the Processor’s List of Accepted Business Types: While a processor may be a high-risk specialist, this does not imply that it services all high-risk company types. For example, some high-risk service providers are willing to accept cannabis merchants, while others are not.

2. Look for a Processor with Load Balancing: Load balancing allows you to split your transactions among many merchant accounts linked to a single payment gateway. It has several benefits. For starters, if one of the accounts fails you, you’ll still have the others to fall back on. Several accounts will allow you to execute more transactions each month to reduce your chargeback risk further.

3. Read Your Contract Several Times: Most high-risk merchant account providers work with various processors, so they do not always publish their rates and fees on their websites. They may vary depending on which merchant account (or accounts) you are matched with at any one time. Consequently, pay close attention to the rates you’ll be charged and make sure you are informed of any extra fees that may arise. Furthermore, although you are unlikely to be authorized for interchange-plus pricing or a month-to-month contract, it never hurts to ask.

What are The Necessary Documents?

The following paperwork is required to go for a high-risk card processor:

  • Constituent documents of the startup;
  • Management, shareholders & secretary team information details
  • Information on the startups’ status ( may be obtained if it was registered during the previous 12 months of the application);
  • Certificate of company information ;
  • Refund policy information and photocopies;

Opening a business would be difficult without the personal papers of senior executives, which are not included in this list. What you’ll need if this is the case is a notarized photocopy of one’s ID, evidence of one’s address, and a bank recommendation. You’ll need each item on this list to create a merchant account. Your intended financial institution or processing center should get as much information as possible from you and your business before accepting your account registration application. They will be authenticated in the future, and the legitimacy of the organization’s activities will be validated.

How Does High-risk Credit Card Processing Affect Your Startup?

Naturally, having your startup designated as “high-risk” is infuriating. While particular startup categories (adult entertainment, gambling, bankruptcy legal startup companies, etc.) almost invariably get the label, having low personal credit or a high average sales may also do it. Don’t be alarmed if a processor rejects your processing application because it deems you a high-risk merchant.

Even if you aren’t approved by most of the industry’s top brands, you may still locate a processor that will deal with you. You will, however, be required to pay higher processing rates and account fees, and you will nearly always be required to enter into a long-term contract with a penalty for early cancellation. You may also be required to maintain a rolling reserve in certain situations. But don’t give up; the presence of several high-risk firms proves that you can manage a successful one.

Many high-risk processors are dishonest and predatory, but numerous honest suppliers provide decent services. We’re here to help you find such service providers.

High-Risk Credit Card Processing Guide

Image Source- Pixabay

In some instances, being identified as a high-risk merchant account implies that it will subject you to further scrutiny to access merchant services. You could even be restricted to a particular number of transactions per month or need to have a certain amount of cash on hand. Due to your high-risk status, you will almost always be forced to pay higher fees and processing rates to get a range of merchant services. Some service providers can even refuse to cooperate with you.


In short, if your company has a high number of chargebacks, a higher-than-average susceptibility to fraud, or financial difficulties, having a high-risk credit card processor will ensure a smooth approval of your account application. Every startup or firm that applies for a high-risk processor is evaluated based on the company’s degree of risk.

The degree of risk significantly impacts the processing rate provided to the company and is generally based on the number of chargebacks received by the firm, offset by the volume merchants handle each month. Chargeback avoidance may go a long way toward lowering your chargeback rate significantly. On the other hand, regular cards do not provide these benefits, and getting approval becomes a long and tedious task for any startup.

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