Posted by tina on Oct 10, 2016


Your eCommerce business needs to take card payments online in order to be successful. To accept payments online, you need to obtain a merchant account either through your bank or through a merchant account provider.

When you apply for merchant processing, the banks or payment service providers may classify you as a high risk merchant.  What are the factors that can cause your business to be considered high risk?

Understanding what these factors are can help you work your way around them. And collaborate with a bank or merchant account provider who is open to offering you favorable terms and conditions to support your business.

Industry Classification

Many banks and merchant account providers protect their interests by having a list of industries that historically have a greater risk of chargebacks & fraud.  If you conduct business in any of these sectors, you may be classified as high risk even if you present a good processing history along with your application.

You can also expect to pay a higher than standard processing fee to cover the risk.  Some of the criteria and types of industries that account providers might identify as high-risk businesses can include, but certainly are not limited to:

  • Travel (unpredictable weather conditions and the possibility of customers making cancellations)
  • Adult industry (customers might deny that they have visited the sites)
  • Neutraceuticals and vitamins
  • Telemarketing and tech support industries
  • Subscription billing and recurring payments business models
  • Financial services
  • High ticket sales
  • Digital content
  • Software 
  • Fast growing industries that require high volume processing capacity
  • Industries that are highly regulated
  • Casinos and online gambling sites

Terminated Accounts List

If you have had your merchant processing account terminated for any reason, banks and processors canplace you on a blacklist called a Terminated Accounts List or Match List. Since all account providers have access to this list, being put on it puts you in the high-risk business category. Thus, you might find it challenging to get approval for a new merchant account. The typical reasons why the providers might choose to turn down your request are:

  • Committing fraud
  • Laundering money practices
  • Too many chargebacks
  • Non-compliance with the terms of the contract.

Possibilities of Chargebacks

Chargebacks occur when the buyer disputes a transaction with their card issuing bank.  Chargeback requests are usually made when:

  • Customers deny that they entered into a recurring bill contract.
  • You ship a product each month, and the customers deny that they placed the order.
  • You don't have a refund policy and customers, when not satisfied with the product or services, want to return them or request a refund.
  • Customers have no way of contacting you like over the phone or email.
  • You don’t respond to customer queries and complaints.
  • You process more credit cards than the limit agreed upon with the account provider.
  • The customers are not aware or overlook the contract terms that payment will be charged to their credit card.
  • The customer might claim that the customizable product she ordered is different from the one she eventually received.
  • You request for full payment for transactions before the customer receives the products, or you complete the service.

Credit Card Not Present Issues

If you allow your customers to pay online without actually swiping the credit card, you could be considered a high-risk business. That's because any transactions conducted by using stolen cards cannot be identified without an alert that the card is lost.

To safeguard your company from the possibility of fraudulent transactions, accept only 3D Secure Transactions. Get tools like Mastercard Securecode, Verify by Visa, and other similar systems to protect you.

Keep in mind, though, that the more steps you add at checkout, the more shopping cart abandonment you will experience.

Low Credit Score and Existing Tax Liens

Merchant account providers will check your personal credit score before approving your application.  If you have any unpaid business or personal tax liens, you might want to pay them off before applying for a merchant account. 

Other Issues

Aside from the issues mentioned above, several other factors could place your business on the high-risk list. They are:

  • You could be delivering products overseas to countries other than your own
  • You could receive payments in currencies other than the currency that the bank or account provider deals in.
  • Long interval between the receipt of payments and delivery of goods or services.
  • The time for which you have been open for business (account providers may be wary of supporting startups since they are unsure of the continued viability of the business)
  • You deal in products that have a high cost and value or expensive items like jewelry, watches, antiques, rare coins, art, and so on.
  • Larger than normal volume of transactions (if you process amounts that are greater than those typically expected from your industry, you can raise red flags that place you in the high-risk business bracket)


Even if you are classified as a high-risk business, you can still find many companies willing to provide processing for you.  High risk processors have systems in place that can help mitigate the processing risk both for you and the processor.   Over time, you can build a solid processing history and have your business transferred to the low-risk category.

How are you handling your high risk processing?

Tina Brandon is SVP for  With over 20 years in high risk processing, she has helped thousands of high risk merchants successfully establish payment processing accounts.  Contact Tina on Skype at tibrandon. Or email her at