The Evolution of High-Risk Merchant Processing

High-Risk Merchant Processing

Are you dealing with the challenges of high-risk merchant processing? Even if you aren’t currently facing challenges, that could change in the future due to things outside your control. We will get into reasons for those changes and give you plenty of insights on how best to handle merchant processing in high-risk industries.


Let’s give you a baseline for starters, then list topics we’re going to highlight today. 


High-risk businesses can be designated as risky for varying reasons. They often face higher processing fees, encounter longer waits for receiving funds, and may even get turned down for merchant services.


After scanning this article, you will have strategies to overcome those issues, plus we will cover: 


  • Understanding payment processing fees for high-risk accounts
  • What makes a business seem high-risk?
  • Processing issues within your control 
  • Trust factors in high-risk merchant processing
  • Being unclear is risky
  • Importance of branding in high-risk merchant processing
  • Businesses that can be considered high-risk
  • The evolution and future of high-risk payment processing 
  • The future is now
  • Wrangling regulations
  • Payment technologies lead your charge into the future
  • Conclusion
  • FAQ on high-risk merchant processing


Here’s a giant heads-up to get things rolling.


Understanding Payment Processing Fees For High-Risk Accounts

Before you sign up for payment processing, it is vital to know the risk of having your merchant account shut down if your business is in a high-risk category. 


This would be tough to overcome, right? After all, most customers pay using credit cards, debit cards, or other digital payments!


Now that you know merchant account shut-down is a possibility, this knowledge will help you choose a trustworthy payment processor. 


See, a processor that promises guaranteed approval or no application process at all may sound great. Yet, it is dangerous to your business because if your company gets labeled high-risk later on, your account could be frozen. 


This is worse than not being approved from the get-go!



There are many reasons why certain businesses or entire industries are labeled higher-risk. 


It could be:


  1. Government regulations
  2. Creditworthiness of the business owner (or no credit history)
  3. Higher chargeback rates in that industry
  4. Delivery method of product or service
  5. In-person payments versus online or over-the-phone payments


Did you notice anything about those five things? 


Each one is subject to change. Some more likely than others. The thing is, as a business owner you only have control over certain things.


There is no way you can dictate or even predict government policy changes. One example came a few years ago when eBay had to make a swift decision on a new product (e-cigarettes). EBay is a giant corporation and even it got caught off-guard in this case.


Their users were selling e-cigarettes on the eBay platform because the items were a new trend. Yet, the product was so new that the government didn’t have time to move on regulating it – even though it is closely related to the highly regulated tobacco industry.

Ultimately eBay decided to ban these sales on their platform.


Then there was news about huge fines and lawsuits in the e-cigarette industry (see Juul lawsuits).


The dominos kept falling from there, so you can see how such events could endanger your sales and relationship with a merchant services provider. 


It is a good reminder to stay updated on business news, especially in your niche.


More high-risk merchant factors


Even beyond new regulations, what if your personal credit score dropped? This could impact your risk level and increase fees since you are ultimately connected to your business. The worst part is credit scores get dinged for reasons often outside your control, including:

  • Credit report errors
  • Divorce
  • Identity fraud
  • Illness and inability to work to pay bills on time


As for industry risks. These could increase even if your business has kept risks low. The result? Your business could still get relabeled as more high-risk by merchant processors simply by being connected to that industry that has taken a hit broadly for whatever reason. 


Consider this example… 


So-called porch pirates stealing packages from doorsteps is a new societal problem, right? This undoubtedly has increased chargebacks as some customers try to get their money back. More chargebacks mean more risks to the merchant processor and connected banks. This could lead to increased processing fees for the entire e-commerce world!


Still, you have opportunities to lower your risk and the resulting elevated fees.


Processing Issues Within Your Control 

The main thing (and this is critical) you can do to take control of your payment processing is— choose a provider that believes in transparency.


Many payment providers tell business owners what they want to hear just to get them to sign a contract!


National Processing does not do business this way, and your provider should not either. Transparency leads to long-term beneficial partnerships between high-risk merchants and processors.


Beyond asking potential payment providers to be clear with all contract details and guidelines, there are more actions you can take to keep fees low.


The Application Process: Be prepared with comprehensive and error-free documentation such as tax records, bank statements, business history, and profit and loss statements. This boosts your approval chances, but there’s more. Solid preparation can prevent future fee hikes due to a processing error that you can plainly and quickly refute.


Also, before applying, check your credit report to clear up any mistakes on the reporting agency’s part. And if need be, pay off any old debt that might have been overlooked.


Consistent Cash Flow: High-risk merchant processing can mean higher fees for businesses with erratic sales cycles. This could be due to seasonal rises and falls that are natural for industries such as resorts, landscaping businesses, or holiday pop-up shops.


Manage Average Tickets: It can be a hurdle for businesses but not impossible to adjust their average ticket price. Large transactions are seen as more risky to merchant processors and banks since a $12 chargeback is not a big deal compared to a $5,000 chargeback! Consider strategies that could make your average sale figures seem more manageable to payment providers.


Now we have to discuss a huge factor that can help with high-risk merchant processing.


Trust Factors In High-Risk Merchant Processing

Branding your business is one overlooked key to gaining trust as a business. First, let’s look at the basics.


Compliance with government regulations is wise because it keeps you in good standing with local, state, and federal officials. It can prevent account shut-downs and keep your payment fees lower since you can often avoid being tagged as a risky business.


Secure transactions play a role in compliance, of course. The government wants our economy to function fairly and efficiently, avoiding and deterring criminals. Yet, many high-risk merchants don’t realize they could increase security past what the government or credit card industry requires.


Many innovations are available to take your payment security to the max, such as:



Many business owners like using technology to their advantage so we encourage using technology to heighten security. It protects your funds, impacts your merchant risk-rating, and defends your business reputation.


However, there are also aspects of minimizing fees in high-risk merchant processing that don’t involve a high-tech approach. These aspects are all about transparent and clear customer communications. This seems like an easy thing to accomplish, but sadly it’s not.


Being Unclear Is Risky

Being clear with your customers means they understand exactly what they will get with their purchase. And being clear means they understand the process surrounding the purchase – before, during, after. But being clear isn’t as easy as merchants believe.


Why do you think communication experts go to school for years to learn the art of communicating clearly? Because it’s easy for humans to misunderstand each other – the old “telephone game” proved this long ago.


The risk of unclear communications with your customers and potential customers is:

  • They feel let down (even cheated)
  • They don’t buy in the first place
  • They leave bad reviews for your business


So, it is important to be certain your business policies, promotions, advertisements, signage, service agreements, etc., are ultra-clear. It builds your business’s trustworthiness and that leads us to— branding.


The Importance Of Branding In High-Risk Payment Processing

What do you think of when you see a sign on the interstate for your favorite business? Well, if you know, like, and trust the business, simply seeing their brand colors and logo gives you peace of mind.


You are certain you and your family can get a good meal or great deal there without any worry at all. This is branding, my friend! 


To be sure, good branding takes time. So there’s no time like the present to take your branding to the next level. Start with the basics:


  • Brand colors used in all communications
  • Consistent fonts
  • Systematic employee training 
  • Company uniforms / apparel 


These simple details brand your business. They ensure your customers that they will get the same positive experience each time they shop with you. Also, with multiple locations, that experience will remain consistent. 


The easiest example of this is McDonald’s.


Their golden arches let you know immediately you can get a quick burger and fries and be on your way. Is it the best burger in the world? No. But it is consistent and McDonald’s branding is how this is cemented in your mind (and billions of other minds!).


Brand trust is even more critical for high-risk merchants. 


Your customer base may, for example, have had problems with other businesses in the industry you are in. It is within your power to change their perception by offering clear communications, consistent messaging, and top-notch service. This makes your business perceived as super-trustworthy – not only perceived but tangibly trustworthy!


This builds your customer base, increases sales, and frames your business in a new light for banks and payment processors. In short, superb branding builds a successful business.


Remember this if you are in any business or industry similar to the following…




  • Marijuana, CBD, hemp businesses
  • Multi-level marketing (MLM) companies
  • Nutraceuticals and dietary supplements
  • Firearms and weapons sales
  • Gentleman’s clubs and other adult entertainment venues
  • Tech support services
  • Travel and airline companies
  • Vaping and e-cigarette products
  • Adult entertainment products
  • Collection agencies
  • Debt consolidation and credit repair services
  • Online gambling and gaming
  • Pharmaceutical and medical supplies
  • Precious metals and rare coins
  • Subscription-based businesses
  • Telemarketing 
  • Timeshares and vacation packages
  • Virtual currency and cryptocurrency exchanges


There are more high-risk niches that could be added, obviously. And new industries arrive each year, making high-risk merchant processing an ever-evolving arena.


Keep in mind, however, experienced payment processors that have assisted other high-risk businesses and kept their fees low are available to you. 


National Processing knows your challenges, has 16 years of proven experience, and offers a $500 Guarantee that our fees beat any high-risk merchant processor – sign up and save money on day one!


Evolution And Future Of High-Risk Merchant Processing

High-risk merchant processing has advanced a great deal. No different than other forms of payments throughout history, though. 


Since the dawn of civilized society, there have been risks connected to trading, buying, and selling. Also, some businesses have historically been more prone to risk than others. Regardless of the time period, people have always wanted to be sure their transactions were secure. 


They expect value in return for their payment and expect to get what they bargained for. 


The wisest merchants always developed strategies to reduce their risk on the business side of things while making transactions safe for their customers, too. 


This is what scales a high-risk business – regardless of the industry!


The Future is Now

Right now, merchants have many plates in the air. They are gauging the future and juggling changes arriving in e-commerce, industry / government regulations, online security threats, scammers, and fast-changing payment technologies. 


E-commerce evolutions will keep progressing as consumer habits change. Society today is vastly different than just a few years ago. More convenience is now expected, along with free shipping. Higher expectations for guarantees and warranties are part of the business landscape as well. 


Luckily, tools exist to help businesses with high-risk merchant processing challenges. These include:


  • Advanced fraud detection
  • Leveraging sales data
  • AI monitoring to decrease chargebacks
  • Optimizing and expanding payment methods


Simply increasing sales is another proven path to minimizing fees in high-risk merchant processing. Not only can this help you qualify for volume discount rates, it shows banks and processors your business is successful and growing as the sales data adds up!



With cybercrime becoming one of the biggest concerns of modern times, it is apparent that government regulations aimed to safeguard consumers will expand and perhaps become more stringent. 


This could impact your operations and increase fees in many cases. However, staying ahead of these changes with creative strategies and solutions provided by payment processing experts could turn this into a positive. How? 


Other businesses (competitors) may be unprepared and lose customers to your company if you provide options and protections that are already above compliance levels.



High-risk or not, any business can stay ahead of competitors and ahead of the curve in the payment arena if they invest in powerful technologies. Fresh equipment and efficient software platforms provide an edge in speed, security, and convenience. 


All three are crucial to serving customers well, which keeps chargebacks low. These innovations also help increase repeat business while encouraging referrals to ramp up your sales volume.


See National Processing’s world-class point-of-sale systems.



Your business deserves reliable service with reasonable processing rates – just as other industries receive. And now you have tactics and strategies that will enable you to achieve those goals.


Key points:


  • Avoid application processes that are “too easy” (future account shut-down risk)
  • Many factors affect your ability to obtain a merchant account
  • High-risk businesses pay higher fees for various reasons (some you can’t control)
  • Trustworthiness and security are factors you have more control over
  • Great branding overcomes some high-risk business concerns


With that, we challenge you to take our $500 Challenge. Sign up with National Processing and get the lowest fees, or we give you a $500 gift card!


Now for three popular questions on high-risk merchant processing.



What if my business is mistakenly labeled as a high-risk merchant?

This should be easily corrected by providing evidence of the error to your provider. Quality providers will be easy to reach, listen to your concerns, and be responsive once it’s clear a mistake was made on their end.


What can I do to stop 100 percent of chargebacks?

Limit sales to known trustworthy customers. This limits your growth potential, though, so there is a balance. The best way to strike the correct balance is with tech tools that prevent chargebacks by stopping risky purchases before the transaction completes.


What type of events can cause merchants to suddenly get labeled as high-risk?

Unrest in a region you ship items to could suddenly make those sales risky, causing your risk level to rise in the eyes of your merchant processor. Also, a supply chain issue that drastically delays your shipments, causing your customers to file chargebacks (through no fault of your own – example: Baltimore bridge collapse).

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Shane McLendon

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Customer focused

If we can't beat your current rates, we'll give you $500!*

We happily accept merchants processing any amount. Price guarantee for merchants processing $10,000 or more per month. Free terminals and other promotions depend on processing volume, credit and qualifications.

Customer focused

If we can't beat your current rates, we'll give you $500!*

We happily accept merchants processing any amount. Price guarantee for merchants processing $10,000 or more per month. Free terminals and other promotions depend on processing volume, credit and qualifications.