High-risk credit card processing refers to payment solutions designed for businesses considered more likely to face risks like chargebacks, fraud, or financial instability. These businesses often operate in industries with elevated risks, making them less appealing to traditional credit card processors.
When a standard processor declines to work with a business due to these concerns, a high-risk processor may offer tailored services and safeguards to help manage the additional risk. Businesses that traditional processors have denied need to understand how they can get help from high risk credit card processing.
Why Some Businesses Are Labeled as High-Risk
A business can be categorized as high risk for many reasons. Some industries, like CBD, adult entertainment, gambling, or travel, have a greater chance of consumer payment disputes and chargebacks.
Others may deal with high average transaction amounts, international sales, or subscription-based models, which increase financial risk.
The following are other factors that may cause a business to be considered high-risk:
- Poor credit history
- A high volume of monthly transactions
- High chargeback ratios
- Operating in a legally gray or heavily regulated industry
Even new businesses with no track record can be labeled high-risk. The simple lack of data can prevent these businesses from getting services from traditional credit card processors.
How High-Risk Payment Processing Works
High-risk credit card processing works much like standard processing but with added protections in place and often stricter . Businesses partner with a payment processor that specializes in managing risk. These providers frequently work with specialized banks that are open to taking on new high-risk clients.
Processors may charge higher fees, require rolling reserves, or even impose stricter contract to offset the risks of chargebacks and disputes. A rolling reserve is when a portion of your revenue is held in reserve for a specific time to cover potential chargebacks.
Essential Features of High-Risk Credit Card Processors
High-risk merchants face the following:
- Higher Processing Fees: Rates typically range from 3% to 6% or more than traditional credit card processors.
- Longer Settlement Times: Due to the added review process and security protocols, funds may take longer to reach your .
- Rolling Reserves: A percentage of your daily or weekly sales is temporarily held to protect against potential losses.
- Chargeback Management Tools: Many high-risk processors provide merchants with tools to help them monitor and dispute chargebacks.
These features protect the credit card processor and bank, but can also benefit the merchant. They help reduce the risks of having your terminated.
Working with a high-risk credit card processor can also offer the following:
- Global Payment Acceptance: Many processors multiple currencies and international transactions.
- Custom Fraud Prevention Tools: With tailored fraud filters, they protect your business against suspicious activity.
- Flexible Contracts: Some providers offer adaptable solutions to your industry needs.
Is High-Risk Credit Card Processing Right for You?
Selecting the right high-risk credit card processor is critical. Start by looking for a provider that works with businesses in your industry. Read reviews, ask about chargeback , and find out if they offer 24/7 .
You should also carefully review the contract, including the fine print. Pay attention to the setup fees, early termination penalties, and reserve policies. A transparent provider should reveal all of these upfront, so there is no guessing or hidden surprises.
If traditional payment processors have declined you or operate in a flagged industry, high-risk credit card processing may be right for you. They can help you stay competitive and accept payments securely and reliably.
