What is a High-Risk Merchant Account?

A high-risk merchant account is a specialist type of payment processing account designed for businesses that are statistically more likely to encounter chargebacks and regulatory complications, or reputational risks.

These accounts are not typically offered by mainstream providers, but rather by dedicated payment processors who cater to industries and business models that fall outside the 'safe' or 'standard' category, making payment processing more challenging.

In this article, we’ll walk through the key factors that determine whether a business is considered high risk, and how high-risk merchant accounts and high-risk merchant services work in practice.

This includes what a high-risk merchant account can offer, the higher fees associated with them, and what steps you can take to apply for one through a trusted provider like DECTA.

Not every business fits into the neat boxes that banks prefer.

When a business is considered high risk, it doesn’t necessarily mean there’s something wrong. Instead, it means the business operates in a way that’s more complex or unpredictable due to various risk factors.

For businesses in these industries, effective risk management and accessing reliable payment solutions are essential for survival, especially to ensure their financial stability.

Industry Type

One of the biggest red flags for payment providers is the nature of the industry itself. Certain sectors carry inherent risks due to their legal status or track record of financial instability.

According to Juniper Research, merchant losses from online payment fraud are forecast to exceed $362 billion globally between 2023 and 2028, driven by eCommerce growth and fraud vulnerabilities in high-risk sectors like travel and digital goods.

Commonly cited high-risk industries include:

These industries often experience more customer disputes and fraud attempts.

For example, the travel industry saw a 71% increase in chargebacks during the COVID-19 pandemic, and it remains flagged as high risk today due to ongoing refund concerns and frequent chargebacks.

Even if your business is fully compliant with UK law, its industry alone could still trigger a high-risk classification, which may require a high-risk payment processor.

For businesses in these industries, effective risk management and accessing reliable payment solutions are essential for survival, especially to ensure their financial stability.

Chargeback History

A chargeback occurs when a customer disputes a transaction and the card issuer reverses the payment.

While some chargebacks are valid, others result from fraud or buyer’s remorse. Either way, they cost businesses money, and processors don’t want to carry that liability for credit and debit card transactions.

Visa considers a business high-risk if its chargeback rate exceeds 0.9% of total monthly transactions.

If your business has ever hit or exceeded that threshold, you may already be on file with card networks as a monitoring merchant.

Recurring billing models, delayed delivery, or ambiguous refund policies can all contribute to elevated chargeback rates, which may require thorough financial statements.

Transaction Size or Volume

Payment processors also examine the average size of your transactions and your monthly sales volume.

Large-ticket items or high-value services expose the processor to greater financial risk per transaction.

Unpredictable spikes in transaction volume can also be a concern. For example, if your business suddenly processes £50,000 in sales after months of lower activity, this might be interpreted as potential fraud or a sign of volatility.

Even if your business is simply growing quickly, these patterns need to be explained and documented to avoid being flagged as high-risk.

Business Location

If your business is registered offshore, operates from a non-EU jurisdiction, or primarily sells to customers abroad, you’re more likely to be placed in the high-risk category.

The reasons are practical: currency conversion and cross-border chargebacks make international sales harder to manage.

For UK-based merchants, selling heavily to high-fraud regions (such as certain parts of Southeast Asia, Eastern Europe, or Latin America) can trigger extra scrutiny.

Card issuers are more likely to reverse transactions from these regions, even when the merchant is legitimate which can affect the merchant account provider's willingness to offer services .

New or Unproven Business

Start-ups and businesses without a trading history often struggle to get approved for standard merchant accounts.

Without evidence of a solid customer base or a history of successful transactions, payment providers simply don’t have enough data to assess the risk.

This doesn’t mean you can’t get approved; it just means you’re more likely to start with a high-risk merchant account until you’ve proven your reliability.

High-risk merchant accounts operate much like traditional ones: they let you accept card payments online or in-store.

However, the way they’re structured and the way they’re monitored is different to help manage the added risk.

Higher Processing Fees

High-risk businesses usually pay more per transaction than their low-risk counterparts, often due to stricter contract terms imposed by the payment processor.

Where a standard merchant might pay 1.5%-2% in fees, high-risk merchants often face rates between 2.5% and 5%, depending on the provider and sector.

There may also be additional costs, such as those associated with risk assessment:

These fees reflect the risk mitigation tools, including fraud prevention tools, nd regulatory compliance measures that providers must implement to serve high-risk sectors.

Rolling Reserves

To protect themselves, most high-risk processors require a rolling reserve.

This is a portion of your income that they hold for a fixed period, typically 90-180 days, which is usually between 5% and 10% of each batch of transactions.

The funds are released on a rolling basis once the hold period ends.

While this may impact short-term cash flow, it provides reassurance to the provider that funds will be available to cover future chargebacks or refunds related to debit card payments.

Longer Approval Times

Unlike low-risk accounts, which are often approved in 24-48 hours, high-risk accounts may take up to two weeks for approval.

That’s because processors need to carry out detailed due diligence, which usually involves:

Providing this upfront will help speed up the process.

Stricter Terms & Monitoring

Once approved, high-risk accounts are subject to closer monitoring.

Providers may track your transaction volume and chargeback ratio month by month.

If anything exceeds predefined limits, they may request clarification or take precautionary action, such as placing funds on hold.

This is done to protect both parties. As long as you stay within agreed thresholds and maintain good communication, these checks should not interfere with daily operations.

Although they require more effort and often come with higher payment processing fees, high-risk merchant accounts offer critical benefits that allow high-risk merchants to accept payments securely while trading safely and legally in challenging sectors, enhancing their payment processing capabilities.

Access to Card Payments When Others Say No

Many high-risk businesses are turned away by traditional banks or processors.

A high-risk merchant account ensures that you can still accept Visa, Mastercard, and other popular payment methods.

Advanced Fraud & Chargeback Protection

High-risk providers are better equipped to handle fraud and dispute prevention.

They often include tools like real-time transaction monitoring and AI-driven risk scoring to help you protect revenue and reduce chargebacks.

Support for International Sales

These accounts often support multi-currency payments, alternative payment methods, and regional compliance tools.

This is especially important if your business serves a global customer base.

Resilience & Flexibility

High-risk accounts are built for growth and volatility.

Standard providers may freeze accounts at the first sign of trouble, but specialist processors are more understanding of fluctuating volume and industry-specific quirks.

Applying for a high-risk account takes more preparation than a standard one, but it’s far from impossible.

Identify Reputable Providers

Work with a provider that understands high-risk industries. DECTA specialises in providing merchant accounts for sectors that others often avoid.

We offer flexible account structures, transparent pricing, and expert support whether you're in online coaching, digital services, adult content, or CBD retail.

Prepare Documentation

You’ll usually need the following:

Having this ready in advance can cut down the approval time dramatically.

Be Transparent

Hiding past chargebacks or exaggerating your experience will only hurt your chances.

Instead, explain clearly how you manage disputes, protect customers, and stay compliant with card scheme rules.

Providers appreciate honesty and want to know that you understand the risks and are taking steps to minimise them with the right payment processing partner.

Ensure Compliance

Before applying, make sure your site includes:

A professionally presented site reassures the provider and gives your customers more confidence to buy.

If your business is considered high risk, that doesn’t mean you should settle for limited payment options or slow support.

At DECTA, we specialise in reliable payment solutions for high-risk industries.

Whether you're growing an eCommerce brand, launching a subscription service, or operating in a regulated space, we’ll help you accept payments smoothly and scale with confidence.

We handle the complexities from underwriting to fraud protection so you can focus on your customers and long-term growth.

Get in touch with our team to see how DECTA can tailor a high-risk merchant account to suit your business and your goals.