Need A High-Risk Merchant Account? Here’s The 6 Best Payment Processors To Work With
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 can be a pretty daunting challenge for any business. 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 a higher 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 deemed to present a higher risk of fraud. Every processor has its own set of criteria for deciding whether a business classifies as high-risk. Thus, a business might be deemed high-risk by one processor, but not by another.
Examples of businesses generally classified as high-risk include those in the adult entertainment industry, e-cigarette and vape shops, and online gambling sites. Other categories that aren’t so obvious include bankruptcy attorneys (clients with bad credit) and furniture stores (large average ticket size). For a complete discussion of the high-risk merchant category, please see our article, Which Businesses & Industries Are Considered High-Risk? (& What It Means If You’re On The List), which includes a full list that most businesses commonly fall into.
Having personal bad credit as a business owner can also put you into the high-risk category. While it’s always possible to improve your credit score over time, be aware that a low personal credit score can affect your ability to get not only a merchant account but also a startup loan, small business loan, and even equipment leases.
Once you’ve been classified as high risk, how do you go about finding a good processor? Is it a good idea to go with a company that promises “instant approval”? How much higher would you have to pay compared to a low-risk merchant? Which provider will give you a shorter-term contract while still giving you good customer support and service? In other words, are there “high-risk specialists” that are ethical, honest, and experienced in the field and will do their best to get you a decent deal on a merchant account?
The good news is that, yes, there are such providers. Read on to learn about our criteria for categorizing a high-risk processor with the highest quality of service available. While there are more than just a handful of such high-risk specialists, we also give our pick of six processors that we think will deliver the best service for the most reasonable price.
Other Featured Options:
- SMB Global: Best for merchants in the travel industry.
Read more below to learn why we chose these options.
Table of Contents
- Why High-Risk Merchant Accounts Are Different Than Traditional Merchant Accounts
- How We Chose The Best High-Risk Payment Processors
- 6 Best High-Risk Merchant Account Providers With Top-Notch Service & Fair Rates
- Looking For One Of These High-Risk Credit Card Processing Companies?
- Other Considerations For Choosing High-Risk Payment Processors
- The Final Word On High-Risk Credit Card Processing
- In Summary: 6 Best High-Risk Merchant Account Providers With Top-Notch Service & Fair Rates
Why High-Risk Merchant Accounts Are Different Than Traditional Merchant Accounts
If a processor has just declined your credit card processing application because you’re what they call a “high-risk merchant,” don’t panic. You’ll still be able to take card payments for your business. Granted, you won’t qualify for the best processing rates, and you won’t be able to obtain service from many of the processors with the highest name recognition in the industry. You will have a harder time finding a processor, but you’ll be fine.
The reality is that, despite the intense competition within the merchant services 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 from the account if approved. In most cases, they err on the conservative side of things, so high-risk merchants aren’t approved for an account.
Of the providers that will approve you, it’s virtually certain that you won’t get nearly as good a deal as a non-high-risk merchant. 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 have to put up a rolling reserve to get approved.
That’s the reality of being a high-risk merchant. However, even within the category of high-risk processors, there are the good, the bad, and the ugly. We’re here to help you to distinguish among them.
How We Chose The Best High-Risk Payment Processors
High-risk merchants have essentially the same needs as everyone else when selecting a merchant account provider — it’s just harder to find one if you’re in the high-risk category. Since your business has been categorized as high risk, you’ll have to make some compromises to sign with a processor.
Despite having to compromise, there’s no reason why you shouldn’t still look for a processor that can give you the lowest possible rates, the least number of fees, a favorable contract, and great customer service. Just be aware that you won’t get the lowest rates, and you will pay more in fees than a non-high-risk merchant. Also, you probably won’t get a month-to-month contract (although sometimes you can successfully negotiate one). That said, the high-risk specialists in this article 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.
Here are the criteria we used to evaluate and identify the best high-risk processors we recommend:
- 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) 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.
- Sales & 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 back-end 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. See our Complete Guide To Merchant Account & Credit Card Transaction Fees for a more detailed look at rates and fees.
- Contracts: There has been a trend in recent years within the merchant services 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 a month-to-month contract when negotiating your account’s terms — 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 detailed articles explaining how their service works. This allows merchants to solve some of the simpler problems so that support staff has 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.
6 Best High-Risk Merchant Account Providers With Top-Notch Service & Fair Rates
The best high-risk merchant account providers in the payments industry have several things in common, including honest sales practices, a transparent onboarding process, personalized customer service, and equitable contract terms. Rates and fees aren’t as low as most low-risk providers offer, but they will be fair and affordable.
With the above criteria in mind, here’s a more in-depth look at six of our recommended high-risk merchant account providers. We present them below in no particular order.
California-based PaymentCloud specializes in placing high-risk businesses, relying on a network of third-party processors and acquiring banks to get you approved for an account. You’ll need to obtain a pricing quote from the company to find out what it can offer you, but merchants’ feedback indicates that its fees and rates are quite reasonable. Best of all, PaymentCloud does the extra work required to accept a high-risk account without charging you any application or account setup fees.
For retail merchants, the company now provides a “free” EMV-compliant credit card terminal with each account. Note that in this case, “free” means you’re free to use it for as long as you maintain your account, not that you can keep it even if you later close your account or switch providers. Nonetheless, it’s a pretty good deal if you’re a small business owner who only needs one terminal. PaymentCloud offers eCommerce merchants access to either Authorize.Net or one of several alternative third-party payment gateways. A free virtual terminal is also available with each account. While its lineup of products and services isn’t as robust as some other providers, it offers all the essentials you’ll need for a small or medium-sized business.
PaymentCloud enjoys a great online reputation, with both our readers and merchants on other sites giving the company a positive endorsement. Low-risk providers such as Dharma Merchant Services and Stripe Payments routinely refer clients who’ve been declined for an account due to their business’s high-risk nature to PaymentCloud. Recommendations from such highly regarded providers carry a lot of weight with us, and we give PaymentCloud a strong endorsement.
- No account setup fee
- Free credit card terminal
- Excellent customer support
- Few public complaints
- No publicly disclosed pricing
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2. Durango Merchant Services
Durango Merchant Services
Durango Merchant Services is one of the oldest — and one of the best — merchant services providers to specialize in serving the high-risk business community. The company has an excellent reputation for honesty, fair rates, and great customer service and support. Like almost all high-risk providers, Durango uses a quote-based pricing system and doesn’t disclose fees or rates on its website. In addition to working with US-based processors and banks, the company can also set you up with an offshore merchant account if you need one.
Durango supports eCommerce merchants through its proprietary Durango Pay payment gateway. This gateway includes all the standard payment and security features you’ll need to run a web-based business, including an Authorize.Net emulator mode. Support for retail merchants includes a variety of countertop terminals that accept both EMV and NFC-based payment methods, as well as the iProcess mobile payments system.
All merchants will be assigned a dedicated account manager who will be your primary point of contact for any customer-service-related issues. While this can sometimes be problematic outside of regular business hours and when your account manager isn’t available, it usually provides a much higher level of service than you’ll get from a random customer service representative. Personalized customer service and the ability to work with various domestic and offshore payment processors set Durango Merchant Services ahead of most of its competitors.
- Offers offshore accounts for international merchants
- Fair pricing and contract terms
- Offers an EMV-compliant mobile card reader
- Dedicated account manager for customer service
- Early termination fee in some cases
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3. Host Merchant Services
Host Merchant Services
Unlike many of our other top choices, Host Merchant Services isn’t a high-risk specialist. The company primarily serves low-risk businesses but is also able to accommodate several high-risk business categories. Its interchange-plus-only pricing and a full range of products and services make it an excellent choice if you can get approved. A former web hosting company, HMS is ideally suited for eCommerce merchants. It uses TSYS Merchant Solutions (now part of Global Payments) as its back-end processor.
Retail merchants can choose from a variety of terminals for sale, as HMS does not lease equipment. If you process over $20,000 per month, you may qualify for at least one free EMV card terminal. Mobile processing is also supported through the ProcessNow mobile payments system, and the company offers a variety of POS systems as well. eCommerce merchants can choose between the company’s proprietary Transaction Express gateway, Authorize.Net, or one of several third-party gateways.
HMS uses interchange-plus pricing exclusively and discloses some standard rates and fees on its website. Be aware that your rates and fees will probably be higher as a high-risk merchant. The company providers 24/7 customer service via telephone and email and has an excellent reputation in this area. If your business falls into one of the categories of high-risk activities that it can accommodate, HMS is an excellent choice for a merchant account provider.
- No early termination fee
- No setup or application fees
- No monthly minimums
- Excellent customer support
- Can be expensive for low-volume merchants
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4. Soar Payments
Soar Payments is based in Houston, Texas, and has been in business since 2015. It specializes in serving the high-risk community and has very competitive pricing and terms that are attractive to low-risk companies. The company offers a small selection of terminals, and you can get a “free” terminal if you’re a low-risk merchant. (You’ll have to return the equipment if you cancel your account with Soar, but there’s no monthly fee.)
Soar is mostly focused on eCommerce services, however. In addition to the Authorize.Net and USAePay gateways, it also offers the NMI payment gateway, which can integrate with most of the more popular online shopping carts. The gateway also integrates with Chargeback Armor, which is an automated chargeback prevention and response program that will be particularly appealing to high-risk merchants.
Soar works with about a dozen banks and processors to place high-risk merchants and can also set you up with an offshore account if you need one. Like most high-risk providers, the company uses a quote-based pricing system exclusively and does not offer any disclosures concerning fees or rates on its website. As a high-risk merchant, you can expect to have both a rolling reserve and a monthly minimum as part of your account. The company’s standard contracts include an initial two-year term, which will automatically renew for one-year periods after that. There’s also a $495 early termination fee, but this only applies during the first two years of your contract. Overall, Soar Payments offers very competitive terms for high-risk merchants.
- Automated custom pricing quote
- Automated application process
- Fast underwriting
- No application fees
- Only works with US-based businesses
- Cannot currently accept CBD oil merchants
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5. Easy Pay Direct
Easy Pay Direct
One of the most well-known high-risk specialists, Easy Pay Direct is headquartered in Austin, Texas, and has been in business since 2000. The company’s primary product is its proprietary EPD Gateway. It also provides full-service merchant accounts for both high-risk and non-high-risk merchants. As always, high-risk merchants will have to pay a premium in terms of processing rates and account fees. However, the additional expense is entirely reasonable under the circumstances.
You’ll have to pay a one-time account setup fee of $99 to get started with Easy Pay Direct, but the company doesn’t charge an early termination fee if you close your account early. Contracts are typically for three years and automatically renew for one-year periods after that. We don’t normally like account setup fees, but the extra effort required to underwrite your account justifies the expense for a high-risk business.
One unique feature offered by Easy Pay Direct is called load balancing, where a business can divide its incoming funds among multiple merchant accounts. This is particularly helpful for high-risk businesses that often exceed the underwriting processor’s monthly processing volume limits. Just be aware that you’ll usually have to pay separate monthly fees for each account, so it might not be cost-effective for some merchants. The load-balancing option and the robust features of the company’s EPD Gateway make it an excellent option for high-volume businesses with an online sales channel.
- Accepts a wide variety of high-risk industries
- Load balancing feature for high-risk merchants
- No early termination fees for most merchants
- In-house sales team
- $99 account setup fee
- A three-year contract with an automatic renewal clause
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6. SMB Global
SMB Global is a relatively new high-risk provider that spun off in 2016 from one of our favorite providers, Payline Data. The company specializes in providing merchant accounts to high-risk and offshore businesses, including CBD merchants and businesses in the travel industry. The company offers a full range of services for eCommerce merchants, including a choice between the NMI Gateway and Authorize.Net. However, it currently doesn’t advertise a mobile processing system or credit card terminals for retail merchants.
Using various back-end processors, SMB Global can approve a merchant account for almost any high-risk business. It has an excellent reputation for fair prices and top-notch customer service. Because it works with so many banks and processors to get you approved for an account, the company doesn’t offer any pricing information on its website. Processing rates, account fees, and contract terms will vary widely depending on which back-end processor handles your account.
While we highly recommend that you request an interchange-plus pricing plan, be prepared to accept a tiered plan instead, particularly if you have a low monthly processing volume or haven’t been in business for very long. Likewise, you can also expect to have a standard three-year contract with an automatic renewal clause and an early termination fee if you close your account early. As a high-risk merchant, you should be prepared to have a rolling reserve included in your account agreement.
- Offers high-risk merchant accounts to a wide variety of industries
- Offers offshore merchant accounts
- Reasonable pricing and contract terms
- Excellent customer service
- No mobile app
- The website lacks detailed account information
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Looking For One Of These High-Risk Credit Card Processing Companies?
While the six providers profiled above represent our top choices for high-risk processing, there are other companies in the industry that you may have heard of. Here are some additional alternatives to consider in your search for a high-risk merchant services provider:
Los Angeles-based eMerchant Broker is one of the more inclusive high-risk specialists in the industry, able to place many high-risk businesses that might otherwise not get approved for an account at all. However, the company’s higher risk tolerance comes at a price. Its processing rates and fees are quite high, even in comparison to other high-risk providers. At the same time, it offers high-quality customer support and has a reputation for honest sales practices, so you should definitely consider getting a quote from the company.
Headquartered in St. Petersburg, Florida, PayKings is a reputable high-risk specialist. The company accepts a wide variety of high-risk industries, including CBD merchants. Online reviews of the company are generally quite positive. However, we haven’t done our own full review of PayKings yet, so we can’t make a valid comparison between them and our six top-rated providers listed above.
Another viable choice for a high-risk business is Instabill. The company is best known for its willingness to accept merchants in just about every high-risk category. It also offers strong support for offshore merchant accounts. However, rates and fees can be on the high side — depending on which back-end processor is underwriting your account.
While BankCard USA accepts some high-risk categories, we don’t recommend them in most cases. The company’s reputation for shady sales practices and poor customer service make them an inadequate choice for most businesses, including those in the high-risk category. If you’re having trouble getting approved for a merchant account with our recommended providers, however, the company might be worth checking out as a last resort.
Other Considerations For Choosing High-Risk Payment Processors
What if the high-risk processor you’re considering isn’t on our list? It doesn’t necessarily mean that they’re not good — they might be very good for your business’s particular needs. Earlier in this article, we discussed some general guidelines on pricing, contracts, customer support, and sales and advertising to think through when making your decision on a processor. Below, we discuss some additional considerations on hardware and software that you might wish to consider.
Hardware and software requirements are essentially the same for both high-risk and low-risk businesses. You’ll need reliable, up-to-date credit card terminals and possibly POS systems and mobile payment solutions as well. eCommerce merchants in the high-risk category will need a solid payment gateway and perhaps a virtual terminal to go with it. Integration with online shopping carts is another important feature. Breaking these down to specific categories, we have:
- Hardware: By hardware, we mean the equipment needed 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.
- We highly recommend that you buy your equipment outright rather than leasing it. Standard terminal leases run for four years and are noncancelable, so you would have to buy out all of the remaining months of your lease if you close your account.
- Many providers now 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). 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. Most newer processing equipment can also accept contactless payment methods using NFC (such as Apple Pay and Google Pay). Contactless payment methods have been steadily gaining in popularity with consumers in recent years and are now more important than ever due to the ongoing COVID-19 pandemic.
- 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 the payment gateway, 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.
- ACH Support: You might be able to save processing costs if you steer your customers to pay by ACH/echecks. ACH and echecks aren’t suited for every type of high-risk business (or every type of business, period). Still, you’ll want ACH support if you can incorporate recurring or subscription billing into your business.
Do You Need A Specialized High-Risk Payment Gateway?
Payment gateways — an essential feature for any eCommerce business — have come a long way from the early days when Authorize.Net was just about the only game in town. Today, most of the larger merchant services providers offer their own proprietary gateway, which all come with various security features and virtually unlimited customization options. At the same time, they also usually include an “Authorize.Net emulator mode” as a nod to that company’s continued domination of the market space.
Are there any special features you should look for in choosing a payment gateway if you’re in a high-risk industry? Generally, the answer is no. Most gateways today offer a solid set of security features, including tokenization and encryption. Don’t accept any gateway that doesn’t provide these critically important features. For high-risk merchants, avoiding chargebacks is even more essential than it is for low-risk businesses. Look for features that attempt to prevent — or at least flag — potential chargebacks before they occur. Services such as Chargeback Armor help detect potential chargebacks, and you should consider adding them to your account if your provider offers them.
Another important reason to consider a proprietary gateway is the issue of data migration. High-risk businesses tend to change providers more frequently than low-risk enterprises, so it’s crucial to be able to take your customer information database with you when you make the switch. Authorize.Net is notoriously poor in this area, charging an inordinately high price to export your customer data to a competing gateway. Other gateway providers also throw up similar roadblocks to discourage merchants from leaving. You’ll want to have a good idea of what your provider’s data migration policies are before you sign up.
Why You Shouldn’t Choose A Payment Service Provider For High-Risk Merchant Services
Merchant accounts can be expensive and complicated, coming with a bewildering variety of fees and charges. For this reason, many small business owners have increasingly turned to payment service providers (PSPs), which allow you to accept credit cards without the need for a dedicated merchant account. PSPs usually come with simple, flat-rate pricing, no monthly fees, and no long-term commitment. Popular PSPs include:
Unfortunately, all payment service providers have strict Acceptable Use policies that prohibit almost all of the common categories of high-risk businesses. While you might still be able to sign up for an account using one of these providers’ online applications, you’ll quickly be shut down once you start processing transactions that violate the Acceptable Use Policy.
In an attempt to get around these policies, some merchants have resorted to being less than honest about their business’s nature. Don’t do this! Deliberately lying to your processor about the types of goods and services you’re selling will not only get your account shut down immediately, but it’s also highly probable that you’ll be placed on the MATCH list, making it far more difficult for you to get approved for an account with any provider.
One notable exception is Square’s program for CBD merchants. Launched in 2019, it allows CBD merchants to use Square as their credit card processor and get access to the company’s ever-expanding lineup of products and services. Processing rates are higher than those for low-risk merchants, but they’re still quite reasonable compared to what other high-risk providers typically charge. If you’re running a CBD business, you should definitely consider this option. You can also check out our guide to the best CBD payment processors for some other suggestions.
The Final Word On High-Risk Credit Card Processing
Running a business is a challenging proposition in itself, but it’s even harder if you’re 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 six 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 several factors, including your credit history, your processing history, and which high-risk business category you fall under.
Unlike most of our favorite low-risk providers, none of the companies 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 usually applies to low-risk merchants, and you may or may not be eligible for similar terms.
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. It’s a good idea to obtain quotes from at least three providers before choosing which one is best for your business. Also, remember that the provider with the lowest rates might not necessarily be the best overall choice. Intangible factors, such as better customer service and support, can make a slightly more expensive provider a better choice in the long run. 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 one or more of our top high-risk merchant account providers, please feel free to leave a comment below.
In Summary: 6 Best High-Risk Merchant Account Providers With Top-Notch Service & Fair Rates
- PaymentCloud: Best for high-risk retail merchants.
- Durango Merchant Services: Best for eCommerce merchants and those who need an offshore account.
- Host Merchant Services: Best for US-based eCommerce businesses.
- Soar Payments: Best for omnichannel businesses.
- Easy Pay Direct: Best for high-volume businesses.
- SMB Global: Best for merchants in the travel industry.