How Long Does It Take To Get A Credit Card For A High-Risk Merchant Account?

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If you are running an online business with a higher risk of chargebacks and desire to process credit card transactions, you will need a high-risk merchant account. Before you start to grasp the credit card processing for high-risk companies, you need to understand what a high-risk merchant is and how to access that you need one. Firstly to open a high-risk merchant account, you need first to find an acquiring bank that will underwrite your business. However, it is apt to get a reliable payment service provider for assistance to increase your position for getting an account.

What is a high-risk merchant account?

A high-risk merchant account is for businesses considered high risk for the banks. A high-risk business is often associated with chargebacks, and they come with the need to pay higher fees for merchant services. Thus if a company has a high potential of chargebacks and refunds, the bank may put a rolling reserve on your account. The amount set by the bank will cover the possibility of chargebacks or fraud.

What is the difference between low-risk and high-risk merchant accounts?

Every payment processor sets its guidelines, but there are some standard features to all the payment processors listed on the market. The features of low-risk merchants based on compliances general evaluation are as follows:

  • Less than $20,000 processed monthly
  • Average credit card transaction is less than $500
  • Zero to low chargeback ratio
  • Minimized returns
  • The industry of merchants is considered as low risk (for example low, risk clothes, household goods, baby products, and such industries)
  • The business is considered low-risk like Japan, Australia, Canada, European Union, and the USA.

What is a high-risk merchant?

The more chargebacks are associated with a business, the higher-risk business it is. The main features of importance here are the industry reputation and processing history (the chargeback ratio must be lower than 0.9%of the total transactions)

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Here the features of high-risk merchants differ based on particular payment processor’s guidelines:

  • More than $20,000 processed monthly
  • Average credit card transaction is more than $500
  • A business sells products and services to countries known for high levels of fraud.
  • Bad credit history and excessive chargebacks.

Who needs a high-risk merchant account?

One of the best examples of high-risk business is the travel industry, as various factors can result in cancellations. Thus it results in refunds and customers who file chargebacks. There are some other industries and business models also that are prone to chargebacks, and a few of them are airlines or airplane charters, health and wellness products, phone locking services, prepaid calling cards, online gaming, international shipping, chain letters, car parts, pawnshops, MLM, and such types of businesses. Also, forex trading and adult-themed websites are amongst the few.

Thus if you are in any of the above or similar types of industries, then you need to maintain a high-risk merchant account to accept credit card payments on your website, thus, dealing with higher costs of the merchant account than regular merchants.

High-risk merchant account fees

High merchant account fees cost more than accounts for low-risk businesses. Certain costs cannot be avoided. Thus, one must be prepared to pay more in processing charges and account fees. However, the norm was age-old. Presently, for credit card processing for high-risk companies, some merchants offer competitive rates tailored to your business for credit card processing. However, the high-risk payment providers still may charge you a setup fee, monthly and annual fee, or even a PCI fee; thus, based on the terms agreed, the charges are levied.

Rolling reserve for high-risk merchants is nothing but an extra layer of protection for the bank against chargebacks or unexpected activities. The amount is decided as per processed volume and business model. The higher the risk, the more is a rolling reserve. Chargeback fees apply to the cardholder’s files for a chargeback and ask the bank to dispute the charge. The money covers the administrative costs of processing the chargeback.

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How do I apply for a high-risk merchant account?

The process for applying for a high-risk account is straightforward. To access a high-risk merchant account, one needs to fill out an application online and accept card payments, and you also need to collaborate with a high payment processor. Some documents and papers must be filled, attested, and duly submitted. The applying bank will ask for credentials with premium access to the platform and the business license in which the card will be issued.

Several risk management experts will decide if the business qualifies for a high-risk merchant account or not. It is analyzed if the business is on the TMF or terminated merchant file list. The credit card processing for high-risk companies is diligently worked on according to the acceptable chargeback thresholds. Thus, if the business history is not good, there were incidents of fraud, and the previous account was lost due to a high chargeback ratio and thus getting a high-risk merchant account for credit card processing for high-risk companies.


The payment platforms with years of expertise and thus consider one business at a time as several factors affect the merchant account. There is a general evaluation system for credit card processing for high-risk companies. Importantly, as a code of conduct, one should specify that they are high-risk merchants during the application process. Communication and honesty are vital for high-risk merchants. Also, maintain cash levels as banks like to see 25% to 50% of monthly cash transactions and prepare bank statements for six months during the application process.

The benefits of a high-risk merchant account are that they assure high chargeback protection, and thus the merchant account is in good order. Plus, it gives global coverage.

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About the Author: Nicky Bella

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