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 that are 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 and a full list of businesses that often fall into it, see our article on the subject.
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” who are ethical, honest, and experienced in the field who 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: SMB Global spun off in 2016 from one of our favorite processors, Payline Data. It specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of back-end processors, it's able to approve a merchant account for almost any high-risk business, including CBC oils. It has an excellent reputation for fair prices and top-notch customer service.
Read more below to learn why we chose these options.
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 be able to 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 account 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 to be made from the account if it is approved. In most cases, they err on the conservative side of things, so high-risk merchants simply aren’t approved for an account.
Of the providers who will approve you, for them to balance their risk, 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 it comes to 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 who can give you the lowest possible rate, 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. And 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) that are 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. For a more detailed look at rates and fees, see our Complete Guide To Credit Card Processing Rates & 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 a month-to-month contract 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 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.
The 6 High-Risk Merchant Account Providers That Offer Top-Notch Service And Fair Rates
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.
- Good for eCommerce businesses
- Good for high-risk businesses
- No account setup fee
- No monthly minimum for low-risk businesses
- Free credit card terminal
- Excellent customer support
- Few public complaints
- No publicly disclosed pricing
- Website needs improvement
PaymentCloud is headquartered in Sherman Oaks, California, and has a regional office in Miami, Florida. It’s been in business since 2010. The company specializes in placing high-risk businesses, relying on a network of third-party processors and acquiring banks to get you approved for an account. While it can’t place every merchant for one reason or another, the company has a higher success rate than many of its competitors in getting merchants approved for an account. Best of all, PaymentCloud does the extra work required to accept a high-risk account without charging you any application or account setup fees.
Like almost all high-risk specialists, the company doesn’t disclose its processing rates or account fees. You’ll have to get a quote from its sales team and do a little negotiating to see how their offer stacks up against other providers.
For retail merchants, it’s stopped offering expensive credit card terminal leases and now provides a “free” EMV-compliant 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 also offers Authorize.Net as its payment gateway, although its system is compatible with other third-party gateways as well. Additionally, it provides a free virtual terminal with each account. While its line-up 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.
The company doesn’t have a BBB profile, and we’ve found almost no complaints against them on the internet. Feedback from our readers has been overwhelmingly positive — something that’s quite rare in the processing world.
Lastly, PaymentCloud is recommended by one of our favorite low-risk providers, Dharma Merchant Services. When Dharma decided to stop accepting high-risk merchants, they started to refer inquiries from high-risk businesses to PaymentCloud. Furthermore, Stripe has also begun to refer many of its applicants who have been declined as high risk to PaymentCloud. To us, a recommendation from a company as highly respected as Dharma carries a lot of weight, and the recent addition of Stripe gives even more comfort.
We give PaymentCloud a strong endorsement.
Jump back to comparison chart
2. Durango Merchant Services
Durango Merchant Services
- Specialists in placing high-risk merchants
- Offers offshore accounts for international merchants
- Fair pricing and contract terms
- Offers EMV-compliant mobile card reader
- Dedicated account manager for customer service
- Early termination fee in some cases
Of all the merchant account providers who specialize in setting up accounts for high-risk merchants, Durango Merchant Services is one of the best. Founded in 1999 and headquartered (naturally) in Durango, Colorado, it has 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, it offers a variety of terminals, PIN pads, and mobile card swipers for sale right on its website. Options include both wired and wireless models, with some offerings that support EMV and NFC payments.
For mPOS, Durango offers the iProcess app (which can be used with both iOS and Android devices) as well as EMV-compliant Bluetooth readers. If you’re using a virtual terminal, it sells a USB-connected card reader that attaches to your computer. Durango currently doesn’t offer any POS systems for sale.
Durango supports eCommerce through its proprietary Durango Pay gateway. The gateway integrates with the numerous payment processors the company uses and includes support for most of the popular online shopping carts. It also offers support for recurring billing and can securely keep customer information in a vault. Durango’s gateway also features an Authorize.Net emulator, which allows it to interface with any shopping cart that works with Authorize.Net. Unfortunately, pricing for the gateway is not disclosed, so be sure to ask when you speak to Durango.
Because Durango works with such a wide variety of third-party processors to set you up with a high-risk merchant account, it doesn’t list rates or fees on the website. These will vary tremendously, depending on which processor Durango sets you up with. While we usually 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. Merchant accounts through Durango don’t seem to have standardized fees. Again, these will depend on the terms that your back-end processor imposes.
Durango assigns a dedicated account manager to every one of its 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 regular 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.
Jump back to comparison chart
3. Host Merchant Services
Host Merchant Services
- Transparent interchange-plus pricing
- No early termination fee
- No setup or application fees
- No monthly minimums
- Good customer support
- Good website and advertising
- Can be expensive for low-volume merchants
Host Merchant Services first opened in 2009. The company is headquartered in Newark, Delaware, and has a second office in Naples, Florida. While HMS doesn’t specialize in high-risk accounts, its website lists several high-risk business categories that it can accommodate. 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 as its back-end processor.
For retail merchants, HMS offers a variety of terminals for sale, as HMS does not lease equipment. If you process over $20K per month, you may qualify for at least one free EMV card terminal. While HMS does not disclose terminal prices on its website, you should be able to negotiate a very reasonable deal, especially if you need more than one. If you already have a compatible terminal, they’ll reprogram it for free.
HMS offers a variety of POS systems that use either tablets or touchscreen displays. While POS systems from Clover, Vital, and SwipeSimple are available, HMS also provides a proprietary system optimized for the hospitality industry called Bonsai. Bonsai was designed to compete with upmarket POS systems, incorporating a high degree of support, customization, and automation but at a lower cost.
If you need mobile processing capability for your business, HMS offers the ProcessNow mobile payments system via a partnership with TSYS. ProcessNow works with either iOS or Android devices, but the current card reader is magstripe-only.
As a tech-focused company, eCommerce is HMS’ specialty. The company resells the Authorize.Net gateway and supports most other third-party gateways. It also has a proprietary payment gateway called Transaction Express. Transaction Express includes a free virtual terminal and supports additional services, such as tokenization or encryption of customer data, ACH services/recurrent billing, check imaging, wireless processing, batch processing, and multi-location networking.
HMS uses interchange-plus pricing exclusively, which is a huge plus. The company publishes “baseline” rates on its website but is willing to negotiate up or down, depending on your monthly volume. See our full review for more details. HMS also discloses a schedule of its account fees on its website. Be aware that you might have to pay higher rates and additional fees if you’re a high-risk merchant. Contracts are month-to-month with no early termination fee.
HMS provides 24/7 customer service and support via telephone and email. Chat is available through the website during regular business hours. It also features an extensive collection of articles and blog posts on its site 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 activities that the company can accommodate, HMS is an excellent choice for a merchant account.
Jump back to comparison chart
4. Soar Payments
- Ideal for high-risk merchants
- Automated custom price quoting
- Automated application process
- Fast underwriting
- No application fees
- Only works with US-based businesses
- Currently cannot accept CBD oil merchants
Based in Houston, Texas, Soar Payments is a relatively new company that’s been in business since 2015. It specializes in serving the high-risk community, but it also has very competitive pricing and terms that are attractive to non-high-risk companies as well.
Soar offers a small selection of terminals, and you can get a free lease if you’re a low-risk merchant. (You’ll have to return the equipment if you cancel your account with Soar.) It also offers the MaxxPay POS system and the MaxxPay Mini wireless terminal for retail merchants.
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 ChargebackArmour, 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. Because of the number of back-end providers the company works with and the fact that each quote will depend on the provider, Soar no longer publishes pricing information on its website. For high-risk accounts, this is fairly standard practice, so it’s nothing to be alarmed about. You can also expect to have both a rolling reserve and a monthly minimum (which will vary from one merchant to the next) as part of your account.
Concerning the processing contract, high-risk accounts have a standard two-year initial term, which will automatically renew for one-year periods after that. There’s also a $495 early termination fee, but this will be removed from your contract after you’ve completed your initial term.
Overall, Soar Payments offers very competitive terms for high-risk merchants.
Jump back to comparison chart
5. Easy Pay Direct
Easy Pay Direct
- Accepts a wide variety of high-risk industries
- Load balancing feature for high-risk merchants
- No equipment leases
- No early termination fees for most merchants
- In-house sales team
- $99 account setup fee
- A three-year contract with an automatic renewal clause
Another Texas company, Easy Pay Direct is headquartered in Austin 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.
Like most high-risk specialists, Easy Pay Direct works with a variety of banks and processors to find one that’s a match for the needs of your business. You’ll have to pay a $99 account setup fee to get started, but considering the extra effort required to underwrite a high-risk merchant account, we feel the expense is justified in this case.
Easy Pay Direct doesn’t give much information on its website about its contracts. If its contracts follow the industry standard, then it likely has a three-year initial term that automatically renews for one-year periods after that. One very positive feature of Easy Pay Direct’s contracts is that they do not have an early termination fee, even for high-risk businesses. While this isn’t quite the same thing as true month-to-month billing, it does make it much easier to close your account without penalty if you have to.
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 monthly processing volume limits imposed by the underwriting processor. 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.
Although Easy Pay Direct doesn’t get as much attention as other, better-known processors, it’s a solid choice for merchants in the high-risk category. We particularly recommend the company for high-risk eCommerce businesses due to the robust feature set of its EPD Gateway.
Jump back to comparison chart
6. SMB Global
- Offers high-risk merchant accounts to a wide variety of industries
- Offers offshore merchant accounts
- Reasonable pricing
- Reasonable contract terms
- Excellent customer service
- No mobile app
- The website lacks detailed account information
SMB Global is a new-ish high-risk provider that spun off in 2016 from one of our favorite providers, Payline Data. Headquartered in South Jordan, Utah, SMB Global specializes in providing merchant accounts to high-risk and offshore businesses.
As a newly-established business, SMB Global is still a little rough around the edges, lacking a mobile processing system and credit card terminals for retail merchants. At the same time, it offers a full range of services for eCommerce merchants, including a choice between the NMI Gateway and Authorize.Net.
Using a variety of back-end processors, SMB Global can approve a merchant account for almost any high-risk business (including those selling CBD oils). 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 all vary widely depending on which back-end processor is handling your account.
While we highly recommend that you request an interchange-plus pricing plan, be prepared to have 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.
Jump back to comparison chart
Other Considerations For High-Risk Payment Processors
What if the high-risk processor you’re considering is not on our list? It doesn’t 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 for you 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.
At the end of the day, a high-risk merchant’s hardware and software needs are pretty much the same as a low-risk merchant’s needs. You’ll want 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 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). 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 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.
The Final Word On Payment Processing For High-Risk Merchants
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 a number of 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. 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.
A Last Look At Our Top Picks
Summary - PaymentCloud relies on a network of third-party processors and acquiring banks to find the right high-risk processor for you. It has a high rate of success, and it doesn't charge any application or account setup fees.
- Durango Merchant Services
Summary - Durango Merchant Services has an excellent reputation for honesty, fair rates, and great customer service and support. The company is so good that we even recommend it for non-high-risk merchants.
- Host Merchant Services
Summary - Host Merchant Services doesn't claim to be a high-risk specialist -- it works with low-risk merchants as well. However, it does work in several high-risk business categories. Best of all, it offers interchange-plus pricing and a full range of products and services. Its service is especially well-suited for eCommerce merchants.
- Soar Payments
Summary - Soar Payments specializes in high-risk accounts but also sells to non-high-risk merchants. As a result, its pricing and terms are very competitive, and the customer service is above average.
- Easy Pay Direct
Summary - Easy Pay Direct serves both high-risk and low-risk merchants. If you're high risk, however, you'll have to pay higher rates and fees, but these are reasonable charges under the circumstances. What sets Easy Pay Direct apart is its proprietary EPD Gateway, which has a robust functionality especially suited for eCommerce businesses.
- SMB Global
Summary - SMB Global spun off in 2016 from one of our favorite processors, Payline Data. It specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of back-end processors, it's able to approve a merchant account for almost any high-risk business, including CBC oils. It has an excellent reputation for fair prices and top-notch customer service.