How To Tell If You Are A High-Risk Merchant

How To Tell If You Are A High-Risk Merchant

High-risk merchants typically are businesses that payment processors and merchant services providers consider to present excessive exposure to fraudulent transactions, default, legal issues or chargebacks. However, the kinds of businesses that fall under this category aren’t always what you might expect.

Here’s a look at some factors that could cause a business to be considered a high-risk merchant:

Your Business’s Financial History

If your business is a startup venture, you likely don’t have an established financial history demonstrating your creditworthiness — and that can make you a high-risk merchant in the eyes of payment processors. Likewise, you could be a high-risk merchant if your business has had past financial difficulties, including a history of missed payments or default.

Your Business is Overseas

Merchant risk is determined in part by a payment processor or merchant services provider’s ability to verify the nature of the business, and its presumed legitimacy, based on location and online footprint. As a result, businesses that are located internationally may be considered high-risk merchants.

Your Sales Transactions and Customers

If the bulk of your transactions expose your business and its merchant services partners to a high likelihood of payment fraud — because they involve card-not-present transactions that make it difficult to verify account ownership and/or checks as a form of payment — you could be considered a high-risk merchant.

The Nature of Your Business Falls into a High-Risk Category

Products and services that fall into certain categories can inherently make your business high risk, especially if your products or services involve adult content, regulatory standards, legal and compliance issues, or the transmission of sensitive data. Businesses that involve nutraceuticals, lending or credit services, e-cigarettes and even online dating sites all could fall into the high-risk merchant category.

If your business is considered a high-risk merchant, it can be to your benefit to seek a merchant services partner that specializes in this space. Not only can the right partner provide customized solutions to ensure you’re able to accept the forms of payment you need to succeed, but it also can recommend appropriate measures to protect your business against security and fraud risk.

What to Do If You Are a High-Risk Merchant

If it has been determined that you are a high-risk merchant, you may have to be a bit more selective when choosing providers you partner with to support your business, but it shouldn’t be seen as limiting to your business.

Seek out payment processors and merchant services providers who specifically cater to the needs of a high-risk business. While a merchant services provider may require that high-risk merchants pay slightly higher fees for credit card processing, or agree to reserve terms that gradually release payments to the merchant to reduce the provider’s exposure to potential chargebacks, providers that specialize in high-risk merchants know how to balance risk management with the competitive terms your business needs to flourish.

Merchant services providers who work specifically with high-risk merchants also have a better understanding of your business model and what features you need to serve customers, compared with those designed to serve the masses. Their expertise makes them a consultative partner you can lean on to understand how to reduce your business’s exposure to risk, based on the factors that have caused you to fall into the high-risk category in the first place. Get recommendations or search online for companies with this type of experience.


As Vice President of Sales at Performance Card Service. Matt Wollersheim focuses on client relations, general marketing and development of new processing channels. He provides a critical link between business owners and payment processors by ensuring that each company's unique model is correctly catered to. Wollersheim is no stranger to e-commerce, as he started his first successful web-based company in college. Years later, he co-founded Performance Card Service when he saw a need for a trustworthy source for high-risk payment processing.