Are you considered a high risk merchant? A company is considered a high risk business based on two conditions: it operates within a high risk industry and/or a risk of financial failure exists. Undoubtably, both circumstances might affect your company’s ability to acquire financing, insurance and merchant accounts. In this article, we will explain what exactly is considered  a ‘high risk’ merchant.

A high risk merchant account is a payment processing account for businesses that are classified as high risk services by banks. However, many business types can be considered a high-risk merchant. Contrary to popular belief, even businesses such as flower shops can be considered high-risk because of a high chargeback rate that occurs. If a financial institution believes that your business is more risk than it’s worth, they might be reluctant to work with you. In addition to this, high-risk accounts can be substantially up-charged to mitigate their side of the risk. Furthermore, here’s how to tell if you business might be considered high risk: 

High Risk Merchant Characteristics

If one of the following occasions applies to your company, a financial institution or processor might consider you a high risk merchant account:

  • Poor credit
  • Out-of-country businesses
  • Bad sales and marketing tactics
  • High incidents of chargeback or fraud 
  • ‘Borderline illegal’ or unregulated industries  

High Risk Industries

Also, if your business is in one of the following industries, a financial institution or processor might consider you a high risk merchant account:

  • Antiques
  • Auction houses
  • Bail bondsmen
  • Barter associations
  • Business to business sales (when they’re not up to code)
  • Camera
  • Cellular phone/beepers (services or equipment)
  • Charities
  • Coin, stamp, collectables dealers
  • Computer
  • Coupons/certificates/prepaid or gift cards 
  • Custom made items
  • Dating services
  • Diet programs (e.g. Weight Watchers, NutriSystems, Jenny Craig etc.)
  • Discount buying clubs/home shopping clubs
  • Door to door sales
  • Electronics
  • Financial aid/counseling for schools/student loans/scholarship search services
  • Financial consultants (except mortgage/loan modification, foreclosure protection guarantees or any unqualified industry)
  • Flea markets/kiosks
  • Fortune tellers (brick and mortar)
  • Fulfillment centers
  • Furniture
  • Gambling advice/sports forecasting or odds making
  • General agents/brokers
  • Golf clubs
  • Home furnishings
  • HowTo books, newsletters, subscriptions
  • Import/Export (non mag stripe or MO/TO)
  • Insurance agents/brokers
  • Internet/eCommerce
  • Investment programs/opportunities/seminars
  • Limousines/taxi (multi or single vehicle)
  • Magazine, newspaper, newsletter subscription services
  • Mail/Telephone Order
  • Membership clubs–health and sports 
  • Misc. education
  • Modeling agencies
  • Moving companies or auto transport services
  • Multi-level marketing 
  • Negative renewal option following a free or low cost purchase
  • Pawnbrokers/pawn shops 
  • Payment Facilitators
  • Real estate agents/brokers engaged in vacation, beach or ski home rentals.
  • Real estate agents/brokers/property sales
  • Shippers/forwarding brokers and motor freight carriers
  • Tanning salons
  • Theatre/concerts
  • Ticket brokers
  • Timeshare
  • Timeshare advertising services
  • Travel agents/tour operators
  • Travel clubs
  • Used car dealers
  • Vitamin sales
  • Water filters/purifiers

Being approved for a merchant account or loan is generally pretty easy. Undoubtably,  Paymentsmith offers an excellent tailored solution for merchants of ALL types. Also, if you’ve been denied a merchant account or financing for being high risk, don’t give up! There are financial providers that specialize in high risk merchant services, and they’re most likely to approve you. Importantly, even if a merchant services company does not advertise as a ‘high risk specialist’ does not mean they won’t have a solution for you.

Think you’re a high-risk merchant? Contact us at Paymentsmith today to talk about our high-risk solutions today.