If your business is part of an so-called high-risk industry, it may be difficult to find quality credit card processing. After sifting through dozens of contracts for high risk merchant account providers and speaking with many sales representatives, we found a good number of companies offer little transparency, confusing and contradictory information and a plethora of hidden fees. We compiled a list of the best high risk merchant account providers and top high risk credit card processors to help small business owners more easily find options that suit their needs.
Since none of these have one-size-fits-all pricing, we recommend business owners obtain quotes for at least three of these companies, and compare those prices against the features they offer.
Good High Risk Merchant Account Providers
eMerchantBroker: Best All-Around High Risk Merchant Account Provider
eMerchantBroker was among the best high risk merchant account providers we came across because of their transparency and multitude of features offered. They can get quite pricey, so if you are looking for quick way to set up payment processing for a startup, it may be better to look at other options, like Instabill. However, if you’re interested in a rich set of benefits for your business or to process a high volume of credit card transactions, eMerchantBroker is the way to go.
Keep in mind transaction costs can vary a lot business to business. For a travel agency with all the proper certifications, eMerchantBroker charges a fixed 3.95% + $0.25 per transaction. There is also a $79 monthly fee. For all of this, you get benefits, the best of which may be having a dedicated account representative. Instead of calling in to a customer help line, you’ll have a point of contact who is familiar with your business and needs, which can expedite handling problems.
Another key feature offered by eMerchantBroker is their ‘chargeback shield’ – and optional service that costs $25 per month, plus $49 per notification. With chargeback shield, you will receive a notification if a customer wants to file a chargeback against you. This gives you time to offer the customer a direct refund, and prevent the chargeback from going through. With most credit card processors, if your account reaches over 2% chargebacks it has the risk of being frozen and shut down. High risk businesses are especially vulnerable to this. The service is pricey, but for high volume businesses that are worried about chargebacks, it can save a lot of money and give extra peace of mind.
- Chargeback Shield
- Fixed pricing good for high-volume businesses
- High monthly fees
Payline Data: Another Good Option
Payline Data is one of the best overall credit card processors on the market for retail businesses because of their competitive pricing that can scale for small and large businesses. They provide resources select high risk businesses as well. Payline has a shorter list of busineses it is willing to work with than most other processors on our list. For Payline, they are willing to work with companies that deal with: Adult Products, Adult Video, E-Cigarettes, Firearms, Gadget Repair, House Rental companies, Information Marketing (Real Estate Based and Tech Support/PC Support, Nutraceuticals, Tour companies, Travel, Used Cell Phones and Other Technology, and Vaporizers.
While pricing information for Payline was harder to come by than for some of the other processors on this list, we still recommend business owners obtain a quote from them because of the high standards they provide to other parts of their business.
Payline Data also offers two services that can help businesses fight against fraud – Verifi and Ethoca. These services track global fraud data and are able to give alerts to businesses in near real-time. This can allow a merchant to reject a known fraudulent transaction before an order is fulfilled. In theory, this can serve your company to reduce chargebacks.
Instabill.com: Transparent & Easy To Work With
Instabill was one of the better high risk merchant account providers we came across in our search. Their customer support agents were very clear and forthcoming with information. One thing to note is that Instabill is not cheap. For example, a Tech Support business would need to pay 4.95% + $0.25 plus the interchange fee for every transaction. That is significantly more than what non-high risk merchants charge, and even slightly higher than other companies on this list. However, this is unavoidable in high-risk industries. The reason we were pleased with Instabill’s offer was due to how easy it was to get pricing information in the first place – something that can’t be said for a lot of their competitors.
Instabill does not post any of their prices online, since the cost will be highly dependent on the industry and bank involved in setting up the merchant account. However, you can get a quote by speaking with a sales representative and obtain a quote very quickly.
- Transparent pricing when contacted
- Good educational resources for business owners
- Provides individualized pricing for each business
Authorize.net: Good For Fighting Against Chargebacks
If you are an online-only business concerned about chargebacks and fraudulent purchases, Authorize.net provides some interesting solutions. The company offers something called an Advanced Fraud Detection Suite, free of charge to their customers. The service aims to prevent suspicious and fraudulent transactions from going through. For example, you can restrict transaction activity from specific. For example, if your customers are primarily from the United States, one transaction from another country would immediately be flagged and rejected.
Authorize.net charges a $25 monthly fee and a $49 set up fee to get started. After that, its per transaction costs are on par with what you pay for most online credit card processors. If you’re a high-risk business, Authorize.net can set you up with one of their resellers and manage the relationship for you. They will only handle the payment processing, and another company will provide you with merchant account support. However, if this happens your prices may vary.
Why Is Your Business Considered High Risk?
There is no exact definition for what constitutes a high-risk business or industry. What is considered high risk largely depends on each indvidiual processor'ss risk tolerance. For example, some merchant account providers will be willing to work with online tech support companies while others may not.
Here is a list of industries and businesses that are commonly considered high risk:
- Adult services
- Mobile Apps
- Internet Gambling
- Dating Websites
- Travel/Tour Companies
- Credit Repair
- High Ticket Sales
- Future Order Fulfillment
- Tech Support
- Annual Membership Sites
- Vacation Rentals
What Is A Merchant Cash Reserve & Rolling Reserve Fund
It's common for many of the high risk credit card processors we outlined above to request something called a ‘merchant cash reserve’ or a ‘rolling reserve fund.’ High-risk businesses will be required to set aside a percentage of their deposits – usually 5 – 15%. The processor will keep this fund on hold for about 6 months, after which the funds will be released back to the business. This occurs on a rolling basis, so that as funds are released, there are other funds being held for another 6 months. While this may be inconvenient, it’s a price businesses must pay for receiving high-risk merchant account services.
This can be best thought of as a security deposit. Since the acquiring bank is extending a line of credit when processing a payment, they need collateral for the riskier transactions. They hold onto this deposit long enough for the chargeback time limit to expire. Credit card processors do this to limit their exposure in the event massive fraud or chargebacks are detected.