The Best High-Risk Merchant Account Providers
Just about everyone in business these days needs to be able to accept credit cards. Finding a reputable merchant account provider to process those credit card transactions for you can be a pretty daunting challenge for any business, but it’s even harder if you’re a high-risk merchant.
So, what is a high-risk merchant? In the simplest terms, it’s any business that for any reason presents an elevated risk of fraud to the credit card processor. While this is usually due to the nature of the business itself, it can also occur if the business owner has particularly bad credit or the business caters to customers that are deemed to present a higher risk of fraud. Every processor has its own set of criteria for deciding whether a business is classified as high-risk. Thus, a business might be deemed high-risk by one processor, but not by another. Examples of businesses that are normally classified as high-risk include those in the adult entertainment industry, e-cigarette and vape shops, and online gambling sites. Those seem pretty obvious, right? Well, there are also a lot of other categories of high-risk businesses that aren’t so obvious. Bankruptcy attorneys, for example, can be classified as high-risk – a good example of how your customers can put you in the high-risk category even if you have perfect credit yourself. Furniture stores are also sometimes classified as high-risk due to their large average ticket size. For a complete discussion of the high-risk merchant category and a full list of businesses that often fall into it, see our article on the subject.
How does being a high-risk merchant affect getting a merchant account? Quite frankly, it makes it a lot harder and more expensive. Despite the intense competition within the merchant account provider industry, getting approved for a merchant account is never a sure thing. Providers have to balance the risk presented by a merchant applying for an account against the potential profit to be made from the account if it is approved. In most cases, they err on the conservative side of things, meaning high-risk merchants simply aren’t approved for an account.
Other providers will approve you, but you won’t get nearly as good a deal as a non-high-risk merchant would receive. Instead, you’ll pay higher processing rates and account fees, and you’ll usually be stuck with a long-term contract and an early termination fee. In some cases, you might also be required to put up a rolling reserve to get approved.
Merchant account providers that are willing to sign up high-risk merchants fall into two categories. On the one hand, there are the companies that indirectly market to high-risk merchants. Unfortunately, many of these companies are among the bottom-feeders in an industry that already has a reputation for being ethically-challenged. Look out for claims such as “instant approval” or similar gimmicks that suggest they’ll approve any merchant, regardless of their credit history or the nature of their business. Sign up with one of these companies, and you’ll be guaranteed to pay higher rates and fees, be saddled with a long-term contract, and receive virtually no customer support or service after the sale.
On the other hand, there are a handful of companies that we call “high-risk specialists.” These are ethical, honest companies that have a lot of experience working with high-risk merchants and will do their best to get you a decent deal on a merchant account. Below, we’ve profiled five merchant account providers that deliver the best service to high-risk merchants. While there are a handful of other high-risk specialists out there, these are the ones that we feel offer the highest quality service available.
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How We Chose:
High-risk merchants have essentially the same needs as everyone else when it comes to finding a merchant account – it’s just harder to find them if you’re in the high-risk category. High-risk retailers are going to want to have access to reliable, up-to-date credit card terminals, as well as possibly POS systems and mobile payments solutions. eCommerce merchants in the high-risk category will need a solid payment gateway, and possibly a virtual terminal to go with it. Integration with online shopping carts is another important feature.
You’ll also want the best pricing plans and contract terms you can get. Here’s where a dose of reality comes in. There are several truly outstanding merchant account providers that we’ve awarded 5-star ratings to, and with good reason. They offer low interchange-plus (or subscription) pricing, month-to-month contracts, and excellent customer service and support. Unfortunately, one of the ways they keep their costs down and can offer such great terms to their merchants is by avoiding the high-risk category altogether. In other words, you won’t get approved for an account with them if they decide that you fall into the high-risk category. Getting approved for a merchant account if you’re considered high-risk involves a few compromises. You won’t get the lowest rates. You will pay more in fees than a non-high-risk-merchant. And you probably won’t get a month-to-month contract (although sometimes you can successfully negotiate one). That said, the high-risk specialists we’ve identified below will usually be able to get you a deal that’s above the industry average, even if it’s not the best of the best.
We’ve identified the following criteria in evaluating our best high-risk merchant account providers. Here’s what we looked at:
- High-risk specialization. This involves more than just marketing toward the high-risk sector. A true high-risk specialist will have a sales staff (preferably in-house) that’s trained and experienced in dealing with high-risk merchant accounts. Likewise, their customer service representatives will also be trained in working with high-risk accounts.
- Hardware. Unless you’re running a purely eCommerce business, you’re going to need equipment to process card-present transactions. This could be a standard wired credit card terminal, a wireless terminal, a POS system, or a mobile smartphone-based system with a card reader and an app. Regardless of what type of hardware works best with your business, we highly recommend that you buy your equipment outright rather than leasing it. Standard terminal leases run for four years and are noncancelable, meaning you’ll have to buy out the remaining months of your lease if you close your account. Note that some providers offer a “free” terminal with your account. Be wary of this and read the fine print. While this offer might work out if you only need one terminal, you’ll often end up paying a higher monthly account fee (i.e., the terminal isn’t really free), and you could also be locked into a long-term contract with a hefty early termination fee. Don’t accept a magstripe-only card reader! With the switch to EMV, you’ll need equipment that can process both magstripe and EMV cards. Equipment that can process contactless payments using NFC (such as Apple Pay) is also a good idea as this type of payment method is rapidly gaining in popularity with consumers.
- eCommerce support. If your business has an online presence, you’ll need a payment gateway to process your sales transactions. You might also want a virtual terminal to go with it, as this will allow you to input card-not-present transactions from any internet-connected device with a web browser. Card readers that connect to your computer via USB or Bluetooth expand the usefulness of a virtual terminal by allowing you to process card-present transactions as well.
- Sales and advertising. Misleading sales gimmicks and dishonest sales agents are common problems in the merchant account provider industry. While we like to see full disclosure of contract terms, processing rates, and account fees right on a provider’s website, even the best high-risk specialists often fall short in this area. There’s a reason for this. High-risk specialists often work with multiple third-party processors to find one that can accommodate your needs. With each processor setting their own rates and terms, it’s practically impossible to spell out all the details on a website. You’ll want to work closely with your sales representative and negotiate to get the best terms available. Just be aware that as a high-risk merchant you’re not going to get as good a deal as a non-high-risk merchant.
- Pricing. Costs associated with maintaining a merchant account include both processing rates and account fees. Processing rates are assessed on a per-transaction basis, while account fees are billed monthly or annually. Ordinarily, we recommend an interchange-plus pricing plan for processing rates over a usually more expensive tiered pricing plan. As a high-risk merchant, however, you will have a harder time getting approved for interchange-plus pricing. It’s still worth asking for during the negotiation process, though. Likewise, you can also expect to pay higher fees than a non-high-risk merchant would. For a more detailed look at rates and fees, see our Complete Guide to Credit Card Processing Rates and Fees.
- Contracts. There has been a trend in recent years within the merchant accounts industry to do away with the standard three-year, automatically renewing contract and allow month-to-month contracts instead. Expensive early termination fees are also gradually being phased out as part of this trend. Unfortunately, as a high-risk merchant you usually won’t be able to participate in this positive development. Providers are more likely to sign you up for the traditional long-term contract. It’s worth asking for when negotiating the terms of your account – just realize that the odds are usually going to be against you.
- Customer support. This is a challenging area for many merchant account providers, especially when trying to provide 24/7 support by phone or email. Many of the better providers are increasingly putting more self-help resources right on their websites, including tutorials and articles explaining in detail how their service works. This allows merchants to solve some of the simpler problems so that support staff have time to deal with more complex issues. While some providers offer better customer service than others, all of our recommended high-risk processors exceed the industry average in this area.
With these criteria in mind, here’s a more in-depth look at five of our recommended high-risk merchant account providers:
Durango Merchant Services
We’ve listed Durango Merchant Services first for a reason. Of all the merchant account providers who specialize in setting up accounts for high-risk merchants, they’re the best of the best. While they aren’t perfect, they are good enough that we even recommend them for non-high-risk merchants. Founded in 1999 and headquartered (naturally) in Durango, Colorado, they have an excellent reputation for honesty, fair rates, and great customer service and support.
Durango doesn’t try to set you up with expensive leases when it comes to processing equipment. Instead, they offer a variety of terminals for sale right on their website. Options include both wired and wireless models, with some offerings that support NFC payments. They also sell the iPS Mobile Card Terminal, which connects to a smartphone to provide mobile payments capability in conjunction with the iProcess mobile app. If you’re using a virtual terminal, they sell the MagTek DynaMag, a USB-connected magstripe card reader that attaches to your computer. Unfortunately, it’s Windows-only. Durango currently doesn’t offer any POS systems for sale.
Durango supports eCommerce through their proprietary Durango Payment Gateway, which integrates with the numerous processors the company uses and includes support for most of the popular online shopping carts. Durango’s gateway also features an Authorize.Net Emulator, which allows it to interface with any shopping cart that works with Authorize.Net. Pricing for the gateway is not disclosed.
Because Durango works with such a wide variety of third-party processors to set you up with a high-risk merchant account, they don’t list rates or fees on their website. These will vary tremendously depending on which processor they set you up with. While we normally like to see more transparency from merchant account providers, in this case, it’s understandable. Depending on your qualifications, you can expect either an interchange-plus pricing plan or a tiered one. Don’t get too excited about the “rates as low as 1.39%” quote on their website – you’ll probably be paying more than that. Merchant accounts through Durango don’t seem to have standardized fees. Again, these will depend on the terms that your backend processor imposes.
Durango assigns a dedicated account manager to every one of their merchants, which means you’ll be talking to the same person every time you have an issue. While this can sometimes be problematic outside of normal business hours and when your account manager isn’t available, overall it provides a much higher level of service than you’ll get from a random customer service representative.
- Direct sales of processing equipment
- Reasonable rates and fees based on your business and your backend processor
- Dedicated account manager for customer service and support
- No support for POS systems
- USB card reader not compatible with Mac computers
For more information about Durango Merchant Services, see our complete review here.
Another 5-star provider, Payline Data isn’t as exclusively focused on the high-risk sector as Durango Merchant Services. However, they do accept high-risk accounts and advertise this prominently on their website. Founded in 2009 and headquartered in Chicago, Illinois, Payline is a relative newcomer to the merchant accounts industry, but they’ve quickly established an excellent reputation for honesty and fair prices. They also provide a full range of products and services to get you started, including terminals, POS systems, and mobile payment solutions. Payline uses Vantiv as their backend processor and partners with them for their iPad-based POS system.
Payline doesn’t offer terminal leases, but they will sell you a terminal or re-program the one you already own. The terminals they offer support both EMV and Apple Pay. Their website doesn’t go into specifics, so talk to your sales representative to see what’s available. They also offer the Vantiv Mobile Checkout app to provide either a tablet-based POS system or a smartphone-based mobile payments solution.
For eCommerce merchants, Payline offers a proprietary payment gateway that integrates with over 125 online shopping carts, supports subscription pricing, and offers numerous fraud protection features. Pricing for the payment gateway is not disclosed on Payline’s website.
Payline discloses a simplified interchange-plus pricing plan on their website: all retail (i.e., card-present) transactions are charged interchange + 0.20% + $0.10 per transaction, while all online (or card-not-present) transactions are charged interchange + 0.35% + $0.10 per transaction. There is a monthly $15.00 account fee. There are no application fees and no early termination fees. Contracts are all month-to-month. Customized pricing (with presumably lower processing rates) is also available to merchants processing over $80,000 per month. Unfortunately, as a high-risk merchant, this simplified pricing may or may not be available to you. Depending on the nature of your business and your processing history, you should expect to see higher (but still reasonable) processing rates. You should also expect to have a rolling reserve included in your account.
Payline provides excellent customer service and support by telephone and email. They also have a great knowledge-base on their website for self-help. Online complaints about Payline Data are very few and far between, which is a good indication of the overall quality of the service they provide.
- Full range of hardware options with no equipment leases
- Minimal account fees, including no early termination fee
- True month-to-month contracts
- Only available in the United States and Canada
- Rates, fees, and contract terms may be substantially different than advertised for some high-risk merchants
For a more detailed look at Payline Data, be sure to check out our full review.
Formerly known as Merchant Warehouse, Cayan has been in business since 1998 and is headquartered in Boston, Massachusetts. While the company doesn’t specifically market itself to high-risk merchants, its broad range of services and competitive terms make it an above-average choice for those in the high-risk category. Effective negotiation is the key to getting a fair, cost-effective deal on a merchant account from Cayan. Note that the company uses First Data as its primary backend processor, and so you can expect to have to put up a reserve in order to establish a high-risk account.
One of Cayan’s best features is their full range of credit card terminals, which are offered for direct sale at very competitive prices. You don’t have to worry about being pushed into an expensive terminal lease. The company offers a number of wired and wireless terminals from Ingenico and Verifone, as well as several other models. All are EMV-compliant, and most either support NFC payments natively or when used in conjunction with a pin pad. Cayan also offers their proprietary cloud-based Genius platform, a terminal/POS hybrid that supports magstripe, EMV, NFC, and QR code-based payments. Cayan also offers a Mobile Chip Card Reader for EMV-compliant mobile payments on an iOS or Android device.
Cayan also supports eCommerce by offering the popular Authorize.Net payment gateway. This can be used by itself, or in conjunction with Cayan’s proprietary MerchantWare Virtual Terminal. Pricing is not disclosed for either of these optional services.
You won’t find any specific information about processing rates on Cayan’s website, but the company offers interchange-plus pricing to all merchants. Account fees aren’t disclosed, either, but you can expect to pay $7.95 per month for a statement fee, $99.00 per year for PCI compliance, and have a $25.00 monthly minimum. As a high-risk merchant, you might also be subject to additional fees and a rolling reserve.
Contracts through Cayan are month-to-month and have no early termination fee. The company’s customer service options include telephone, email, and chat, although the latter is sometimes unreliable. Cayan has an above-average reputation when it comes to customer service, although it’s not as stellar as some of the other providers we’ve profiled here.
- Wide range of terminal equipment for direct sale (no terminal leases)
- Month-to-month contracts with no early termination fee
- Interchange-plus pricing
- Above-average number of complaints relative to size
- Account fees not disclosed on website
- $99 PCI annual compliance fee
For more information, see our complete review here.
Headquartered in Portsmouth, New Hampshire, Instabill has been in business since 2003. The company uses a large number of backend processors to provide accounts to high-risk merchants and offshore companies doing business in the United States. A high-risk specialist, they also provide accounts to non-high-risk merchants as well. Although they’re a fairly small company, they have a strong reputation for being able to provide merchant accounts to businesses that would otherwise have a hard time being approved for one.
Instabill doesn’t provide very much information about credit card terminals and other hardware on their website. They do offer a variety of Verifone and Ingenico terminals, many of which support both EMV and NFC-based payments. Be aware that these terminals are probably being offered through a lease – which you should avoid like the plague. We recommend that you buy your equipment outright and have Instabill re-program it to work with their accounts. You’ll save thousands of dollars in the long run.
The company also partners with CardFlight to provide a mobile, EMV-compliant POS system and a smartphone-based mobile payments system. Pricing for these options is not disclosed on the Instabill website.
For high-risk eCommerce merchants, Instabill offers their proprietary international payment gateway that can process transactions in multiple currencies. If you’re in the MOTO (mail order/telephone order) sector, they also include a free virtual terminal.
Because Instabill works with so many different backend processors and there are so many variables that go into determining rates and fees for a particular business, they don’t advertise any specific fee or rate information on their website. They do, however, provide a Merchant Account Fees and Rates page which explains many of the factors that go into determining these costs. They’re also upfront about the fact that you will pay more as a high-risk merchant. Contracts are also highly variable for the same reasons, but you should expect a standard three-year term with an early termination fee in most cases.
Instabill uses a team of in-house sales representatives to set up accounts and doesn’t rely on independent agents. Customer service is also entirely in-house and includes telephone, email, and chat options. While the quality of customer support is generally very good, it’s also limited to normal business hours. Instabill is a solid choice if you’re a high-risk merchant who’s had trouble getting approved with other providers. Be aware, however, that they don’t accept everyone. Their prohibited list includes business categories such as drug paraphernalia, cigarettes, and weapons.
- High approval rate for hard-to-place businesses
- International payment gateway with multi-currency support
- In-house sales and customer service staff
- Offers equipment leases rather than direct sales
- Customer support only available during normal business hours
For more information, see our complete review here.
Host Merchant Services
Host Merchant Services is a relative newcomer to the merchant accounts business, first opening in 2009. The company is headquartered in Newark, Delaware and has a second office in Naples, Florida. While they don’t specialize in high-risk accounts, their website lists several high-risk business categories that they can accommodate. Their interchange-plus-only pricing and a full range of products and services make them an excellent choice if you can get approved. A former web hosting company, HMS is ideally suited for eCommerce merchants. They use TSYS as their third-party processor.
For retail merchants, HMS offers a variety of Verifone and Equinox (formerly Hypercom) terminals. Terminals are offered for sale, and the company does not lease its equipment. While prices are not disclosed on the HMS website, you should be able to negotiate a very reasonable deal on terminals, especially if you need more than one. If you already have a compatible terminal, they’ll re-program it for free.
HMS offers a variety of POS systems that utilize either tablets or touchscreen displays. Choices range from an 8” tablet-based system up to a 17” touchscreen monitor. The company’s Starter, Plus, TouchStation Plus, and Custom POS options should fill the needs of just about any business that needs or wants a POS system.
If you need a mobile processing capability for your business, HMS has you covered. While their website still promotes their proprietary HMSPay app, the company has very recently discontinued this in favor of ProcessNow, which they offer via a partnership with TransFirst. ProcessNow works with either iOS or Android phones, but the current card reader is magstripe-only and requires a headphone jack to plug into.
As a tech-focused company, eCommerce is HMS’ specialty. The company has recently introduced their proprietary Transaction Express payment gateway, which includes a free virtual terminal. (Note that the HMS website has not been updated to show this new product as of this writing). HMS also supports a large number of third-party gateways, including Authorize.Net.
HMS uses interchange-plus pricing exclusively, which is a huge plus. While they don’t disclose their rates on their website, they’re based primarily on monthly processing volume and are very competitive. See our full review for more details. Fees are not disclosed either, but include a $24.00 annual fee, a $14.99 monthly account fee (which includes PCI compliance), a variable payment gateway fee ($5.00 per month for Transaction Express, $7.50 per month plus $0.05 per transaction for Authorize.Net) and the usual incidental fees (i.e., chargebacks, voice authorizations, etc.). Again, you might have to pay additional fees if you’re a high-risk merchant. Contracts are month-to-month with no early termination fee.
HMS provides customer service and support via 24/7 telephone and email. Chat is also available through their website during normal business hours. They also feature an extensive collection of articles and blog posts on their website for customer education. Support quality appears to be well-above-average, based on the almost complete absence of complaints about it on the BBB and other consumer protection websites. Assuming that your business falls into one of the categories of high-risk business that the company can accommodate, HMS is an excellent choice for a merchant account.
- Full range of products and services for retail and eCommerce businesses
- Exclusive interchange-plus pricing plans
- Excellent customer service and support
- Rates and fees not disclosed on website
- Can only accommodate a small number of high-risk business categories
- Mobile card reader not EMV-compliant
For more information, see our complete review here.
Running a business is a challenging proposition in itself, but it’s even harder if your business is in a high-risk category. We’re all aware that a distressingly large number of new businesses will fail within the first few years of starting up. It’s not hard to believe that many traditional merchant account providers take advantage of this unfortunate reality with their long-term contracts, early termination fees, and expensive terminal leases.
If anything, new high-risk businesses are even more likely to fail than others, which is one reason merchant accounts are more expensive for them. All five of the providers we’ve profiled in this article are good choices for high-risk merchants. Which one is best for your particular business will depend on a number of factors, including your credit history, your processing history, and which high-risk business category you fall under.
For particularly risky businesses that have a hard time being accepted by other providers, we recommend Durango Merchant Services as our top overall choice. Less-risky businesses can also find good service and terms through Payline Data or Cayan. Instabill is the best choice for international businesses operating in the United States. Finally, Host Merchant Services is a particularly good fit for eCommerce merchants, although they can only approve a limited number of high-risk business categories.
None of the providers we’ve profiled offer much in the way of specific information regarding rates, fees, or contract terms available to high-risk merchants. Be aware that the information they do provide on their websites applies to non-high-risk merchants, and you may or may not be eligible for them. Our best advice is to do your research ahead of time, talk to sales representatives from the companies you’re interested in to see what they can offer you, and review your proposed contract thoroughly before signing up. Lastly, unless you have a long and stable processing history, most high-risk merchant accounts will require a rolling reserve. Just remember that your reserve will decrease over time as you build up a processing history.
If you’ve had any experience with any of our top high-risk merchant account providers, please feel free to leave a comment below.