If you run a business that’s considered “high-risk,” finding the right payment gateway can be a challenge. Traditional payment processors are often hesitant to work with high-risk businesses due to a range of concerns that extend beyond the risk of fraud and chargebacks. They’re worried about higher administrative costs, increased insurance premiums, and the added burden of regulatory scrutiny.
You don’t have to be a niche industry to be considered high-risk either. Even industries like travel agents and subscription services are often refused by mainstream processors.
Fortunately, a range of companies specialise in filling this gap, offering dedicated payment solutions tailored to meet the unique needs of high-risk businesses.
I’ve spent time researching exactly who these companies are and investigating their features, reviews and pricing.
What Is A High-Risk Merchant Account?
High-risk merchant accounts are specialized payment processing solutions for businesses that are deemed to be at a higher risk of chargebacks, fraud, or other financial losses. These businesses may operate in industries that are considered risky, such as travel, gambling, or adult entertainment. They may also have a history of high chargebacks or financial instability.
High-risk merchant accounts are typically offered by specialized payment processors that have experience working with high-risk businesses. These processors can provide businesses with the tools and support they need to accept credit and debit card payments securely and efficiently.
Typically, these accounts have higher fees and stricter requirements than standard merchant accounts. This is because the payment processor is taking on more risk by processing transactions for these businesses. However, high-risk merchant accounts can be a valuable lifeline for businesses that would otherwise be unable to accept credit and debit card payments.
The Best High-Risk Merchant Accounts for UK Business
Total Processing: Best Overall High Risk Merchant Account
Manchester based Fintech, Total Processing stands out for its flexibility, comprehensive features, and customer-centric approach. They offer a wide range of services covering both online and physical outlets, with a focus on security and fraud prevention. With no long-term contract commitments and the ability to negotiate for better rates, Total Processing offers a great package for businesses, including those in high-risk sectors. They cover 180 currencies.
With a 99.99% processing uptime, they connect businesses to a global network of acquiring banks and payment methods. Their platform is compatible with multiple programming languages and integrates easily with popular e-commerce interfaces like WordPress, Magento, and Shopify. They also boast a superb high customer satisfaction rate, as evidenced by their 4.9 TrustPilot rating.
Pros
- Business-Specific Pricing: Unlike flat-rate pricing models, Total Processing offers customised pricing tailored to your business needs, including interchange-plus and tiered models.
- Extensive Integration Options: Easily integrate with popular platforms and various programming languages. Quick setup and same-day integration are also promised.
- 198+ Payment Methods: The platform supports a wide range of global payment methods, making it highly versatile for international transactions.
- High Approval Rates: Partnerships with multiple acquiring banks ensure higher approval rates and faster processing times.
- Comprehensive Security: Features like 3-D Secure, PCI DSS compliance, and a ‘Total Defender’ fraud shield offer robust protection against fraud and chargebacks.
- 24/7 Customer Support: A UK-based, well-trained customer service team is available round the clock for assistance.
Cons
- No Flat Rate Pricing: The absence of a flat-rate pricing model may not suit businesses looking for predictable fees.
- Online Negative Reviews: While the company has a strong overall reputation, there are various online reviews that point to areas of improvement.
- ISO Business Setup: Being an ISO means they act as intermediaries, which might not appeal to businesses looking for direct relationships with acquiring banks.
Why We Chose it
Total Processing stands out for its excellent customer service, which is both responsive and expertly delivered. The company’s account managers are highly proactive, making the setup process easier and resolving issues before they become major headaches. Their support is so effective that it feels invaluable when you’re getting started or running into problems.
Transparency and reliability are also big wins for Total Processing. If you’re aiming to build a strong and stable online business, this company offers the kind of sturdy backbone you’d want for handling payments. The service is not only good; it’s also quick, which is vital for any business that can’t afford delays.
While setting up with Total Processing can take a bit of time, it’s time well-spent. The company keeps you in the loop throughout the process, making sure you’re never left wondering what’s happening. This level of communication shows that they really care about client satisfaction.
Worldpay: A Leading High-Risk Processor
Worldpay is a leading option for UK businesses seeking a high-risk merchant account, distinguished by its long-standing reputation and broad industry experience.
This well-established payment processor accommodates a variety of high-risk sectors, including but not limited to gambling, nutraceuticals, and telemarketing.
Pros
- Customised Solutions: The platform offers tailored solutions designed to meet the unique needs of specific high-risk industries.
- Flexible Pricing Models: Merchants canchoose from multiple pricing structures, including interchange-plus, monthly fees, and pay-as-you-go schemes.
- Robust Security: Equipped with advanced fraud protection tools, Worldpay effectively minimizes the risk of chargebacks.
- Multi-Currency Support: The platform enables high-risk merchants to accept payments in over 120 different currencies, enhancing its suitability for international transactions.
- Quick Fund Transfers: Most bank transfers are processed within one business day.
- Scalability: Worldpay’s platform can easily adapt to the needs of high-risk businesses, regardless of their size.
- Dedicated Support: The company offers dedicated account management and round-the-clock customer support, making it easier for merchants to resolve issues and queries.
Cons
Opaque Pricing: Worldpay does not publicly disclose its rates and fees. While they are competitive within the
Instabill
Instabill is a merchant services provider with a focus on serving high-risk businesses that are often turned away by traditional payment processors. Specializing in industries such as online pharmacies, adult entertainment, and gambling sites, Instabill provides a range of services tailored to the unique needs of these high-risk sectors.
While their specialized service comes at a premium, the company’s expertise and extensive banking relationships make it a valuable option for unconventional high-risk businesses. Merchants should, however, be prepared for higher costs and be fully aware of the trade-offs involved.
Pros
- Broad Acceptance: Instabill accepts a wide array of payment methods, including major credit cards, ACH payments, checks, and digital wallets, offering flexibility to merchants.
- International Processing: The provider offers multi-currency processing, making it an apt choice for businesses with a global customer base.
- Comprehensive Payment Solutions: Merchants have access to a virtual terminal, payment gateway, and API integration options, catering to diverse operational needs.
- In-House Support: Instabill provides in-house customer support and account management, ensuring a more personalized service.
- High-Risk Underwriting: Leveraging multiple backend processors and banks, Instabill effectively facilitates high-risk underwriting.
Cons
- Opaque Pricing: Rates and fees are not publicly disclosed and tend to be higher than average, requiring merchants to contact the company for a custom quote.
- Variable Contract Terms: Factors like contract length and early termination fees will differ from merchant to merchant.
- Additional Financial Requirements: Fund holding and rolling reserves are commonly required as part of their risk mitigation strategy.
Why We Chose It
Instabill really stands out for its strong customer service and its knack for getting high-risk accounts up and running. The company scores an impressive 4.8 out of 5 stars on Reviews.io, and it’s easy to see why.
The account managers at Instabill go above and beyond. They don’t just manage accounts; they find solutions to difficult payment issues. The level of personal care they give makes it feel more like a partnership than just another business service.
Setting up a merchant account with Instabill is generally smooth sailing. While it can take some time for them to review and approve your account, that’s pretty normal for high-risk businesses. What’s exceptional here is how hard they work to find the right solutions for each merchant. It’s clear they won’t rest until they’ve sorted out your payment needs.
ccNetPay
CCnetpay is a specialized merchant services provider with a focus on high-risk and international businesses. Their services include payment processing and merchant account provision, particularly for sectors often overlooked by traditional processors such as pharmacies, adult entertainment, and gambling industries.
Pros
- Broad Industry Coverage: CCnetpay accepts a variety of high-risk industries, including specific categories like adult digital content, gaming, and nutraceuticals, making it a versatile choice for businesses in these sectors.
- Global Payment Solutions: With international processing available in over 150 currencies and offshore merchant accounts, CCnetpay serves a global clientele.
- Comprehensive Payment Features: The provider offers a range of payment solutions including a virtual terminal, payment gateway, and API integrations.
- Robust Security Measures: Features like 3D Secure, fraud monitoring, and chargeback management are in place to mitigate risks associated with high-risk transactions.
- Rate Flexibility: CCnetpay offers tiered pricing based on risk levels, starting from a higher discount rate of 1.95% + 0.25 EUR per transaction.
Cons
- Opaque Pricing: Specific pricing details, including additional account fees and early termination fees, are not publicly disclosed.
- Variable Approval Time: The approval process can take anywhere from 48 hours to several weeks, requiring businesses to plan accordingly.
- Special Conditions for Some Industries: Not all high-risk categories can be accommodated through direct accounts in Europe, and some may require offshore acquirers.
What Is Considered a High-Risk Merchant?
You don’t have to be operating in a niche industry to get classified as high-risk. There are a number of factors that can contribute to this classification :
- Industry: Some industries are considered to be inherently high-risk, such as travel, gambling, and adult entertainment.
- Business model: Businesses that sell digital products or services, or that operate on a subscription basis, are more likely to experience chargebacks.
- Financial history: Businesses with a history of high chargebacks or financial instability are also considered to be high-risk.
- Country of operation: Businesses that operate in countries with high levels of fraud or corruption are also considered to be high-risk.
Here are some examples of businesses that are commonly considered to be high-risk:
Adult Entertainment
Alcohol Products
Auction, Online
Bars and Nightclubs
Car Parts and Vehicle Sales
CBD Oil
Credit Repair and Debt Management
Cryptocurrency
Direct Sales and Pyramid Selling
Domain Registration
Events and Tickets
Gaming and Gambling, Online
Health and Wellness Products
Insurance
Investment Schemes
ISP and Hosting Services
Jewellery, Watches & Accessories
Lender Merchant Account & Services
Money Transfer
Nutraceuticals
Payday Loans
Phone Locking Services
PPI Merchant Accounts & Services
Prepaid Phone Cards
Software Downloads
Tattoo Studios
Technical Support & Web Development
Tobacco and E-Cigs
Travel and Tourism
Factors That Lead to a Business Being Classified as High-Risk
The classification of a business as high-risk is not arbitrary; it is based on a set of specific factors that payment processors and financial institutions evaluate. One of the primary factors is the industry in which the business operates. Industries subject to high levels of regulation, or those that have a reputation for a high rate of chargebacks, are often labelled as high-risk.
Additionally, a business’s financial history can be a determining factor. A history of high chargeback ratios, poor credit, or previous issues with payment processors can all contribute to a high-risk classification.
Geographic location can also come into play, especially if the business operates internationally or in regions considered to be financially unstable. Finally, the business model itself, such as whether it operates online or has a high ticket value, can influence this classification.
Understanding High-Risk Merchant Account Fees
High-risk merchant accounts typically have higher fees than standard merchant accounts. This is to reflect the increased risk that the payment processor is taking on by processing transactions for these businesses.
Here is a breakdown of the most common types of high-risk merchant account fees:
- Discount rate: This is a percentage of each sale that you will pay to the payment processor. Discount rates for high-risk merchant accounts typically start at 1.95%.
- Per-transaction fee: This is a flat fee that you will pay for each transaction processed. Per-transaction fees for high-risk merchant accounts are also typically higher than standard accounts.
- Reserve fund: Some payment processors will hold back a portion of your earnings in a reserve fund. This is to protect the processor in case of chargebacks or fraud. The amount of the reserve fund will vary depending on your business and the payment processor.
- Setup fee: Some high-risk payment processors charge a one-time setup fee when you open an account.
- Monthly or yearly fees: Many high-risk merchant accounts also have monthly or yearly fees. These fees are typically higher than those for standard merchant accounts.
- Special category fees: If your business falls into a high-risk category, such as adult content or gambling, you may be charged an additional yearly fee.
- Exit fee: If you decide to cancel your high-risk merchant account, you may be charged an early termination fee.
| Fee | Estimated amount | Description |
|---|---|---|
| Merchant account fees | £100 – £700 per year | This is a fee that is charged by the payment processor for maintaining your merchant account. |
| Transaction fees | 1.25% – 2.75% of each transaction | This is a fee that is charged for each transaction that you process. The fee is typically a percentage of the transaction amount, plus a small per-transaction fee. |
| Payment gateway fees | Around £20/month | This is a fee that is charged by the payment gateway provider for processing your payments. |
| Currency transfer fees | Around 0.5% – 2% for Europe | This is a fee that is charged if you are selling to customers in a different currency. The fee is typically a percentage of the transaction amount. |
| Payment terminal rental | Annual rental around £170 | This is a fee that is charged if you are using a payment terminal to process payments. |
| PCI compliance fee | Around £20/month | This is a fee that is charged to help you comply with the Payment Card Industry Data Security Standard (PCI DSS). |
| Chargeback fees | £5 to £15 | This is a fee that is charged if a customer disputes a charge on their credit card. |
How To Choose a High-Risk Account Service Provider
When choosing a high-risk merchant account service provider, it is important to consider the following factors:
- Vendor acceptance: Not all payment processors accept high-risk merchants. Some providers may specialize in certain industries or types of businesses. If you have an offshore company, very poor credit, or operate an especially high-risk business, you may need to look for a provider that caters specifically to your circumstances.
- Fees: High-risk merchants typically pay higher fees than low-risk merchants. This is because payment processors take on more risk when processing transactions for high-risk businesses.
- Credit score: Your business’s credit score may be a factor in determining whether you are approved for a high-risk merchant account and what fees you are charged.
- Required documentation: When you apply for a high-risk merchant account, you will be required to provide business and tax documents. The payment processor will use these documents to assess your business’s risk and determine your merchant account terms.
High-Risk vs. Low-Risk Merchant Accounts
Payment processors classify merchants as either high-risk or low-risk based on a number of factors, including the industry they operate in, their average transaction value, and their chargeback rate. High-risk merchants are those that are considered to be at a higher risk of fraud, chargebacks, or other financial losses.
| Characteristic | Low-Risk Merchant Account | High-Risk Merchant Account |
|---|---|---|
| Transaction volume | Less than £16,000 per month | £16,000 per month or more |
| Average transaction size | Less than £400 | £400 or more |
| Country of operation | Low-risk country (e.g., UK, Canada, Japan, Australia, Europe) | Any country |
| Currency | Single currency (e.g., GBP) | Multiple currencies |
| Chargeback rate | Very low or zero | Higher |
| Return rate | Low | Higher |
| Industry | Low-risk industry (e.g., retail, restaurants, professional services) | High-risk industry (e.g., adult entertainment, gambling, travel, subscription services, e-commerce businesses selling high-priced items) |
FAQs
Why is my business considered high-risk?
Businesses are typically classified as high-risk due to the industry they operate in, their financial history, or their business model. Industries like gambling, adult entertainment, and pharmaceuticals are often considered high-risk.
How do high-risk merchant account fees differ from standard accounts?
High-risk merchant accounts usually come with higher transaction fees, set-up fees, and rolling reserves to mitigate the risk of chargebacks and fraud. The pricing structure may also differ, often requiring custom quotes.
Can I get a high-risk merchant account with bad credit?
Yes, one of the features of high-risk merchant accounts is their availability to businesses or owners with less-than-perfect credit histories. However, expect higher fees and stricter contract terms.
How long does it take to get approved for a high-risk merchant account?
While some providers might offer approval within 48 hours, others may take several weeks, especially if the underwriting process is complicated.
Are there any restrictions on high-risk merchant accounts?
Yes, high-risk merchant accounts often have restrictions such as lower processing volume limits or requirements for cash reserves. These restrictions aim to minimise the financial risk for the account provider.
Can I accept international payments with a high-risk merchant account?
Yes, many high-risk merchant accounts offer multi-currency support and can process international transactions, although additional fees may apply.
How does a rolling reserve work?
A rolling reserve is a type of financial safeguard used by payment processors. A percentage of your daily transactions is held in reserve and released back to you after a predetermined period. This is done to cover potential chargebacks or fraud.
Are there any transaction limits on high-risk accounts?
Yes, high-risk merchant accounts often come with transaction limits, both minimum and maximum, to manage risk. These limits can sometimes be negotiated depending on your business needs and processing history.
What happens if I get too many chargebacks?
Excessive chargebacks can result in higher fees, account restrictions, or even termination of your merchant account. It’s essential to manage chargebacks effectively to maintain a good standing with your account provider.
Can I negotiate the fees and terms of a high-risk merchant account?
While fees and terms for high-risk accounts are generally less flexible than standard accounts, some providers may be open to negotiation, particularly if you have a strong processing history.
Is it harder to get approved for a high-risk merchant account if I’m a new business?
Being a new business can add an extra layer of difficulty in obtaining a high-risk merchant account, mainly due to the lack of processing history. However, strong financials and a solid business plan can improve your chances.