Businesses in certain fields struggle with payment processing, because their transactions carry higher exposure to chargebacks, fraud, or compliance checks. Banks and payment networks label them as high risk industries. As a result, many mainstream merchant services providers refuse to work with them. For example, travel agencies and adult content sites fall in this category.
These businesses have high dispute rates and strict regulations that make banks cautious. Standard processors see higher chargeback exposure and potential fraud exposure with these accounts. They need a special account called a high risk merchant account.
High risk business categories need support from merchant account providers. They can help track chargebacks, manage billing descriptors, and handle disputes. Providers also review accounts to keep them compliant. A reliable payment system helps high risk merchants keep their merchant account active.
What is a high risk merchant account?
A high risk merchant account is a special payment account for businesses. Banks consider them as high risk accounts. It lets these businesses accept credit card payments when regular processors will not support them. The account works like a normal merchant account but has extra protections for the provider. High risk merchants face more chargebacks and fraud checks, so fees are higher.
Before approval, the provider reviews the business and the owners. They check corporate documents, tax records, and identity details. They confirm the business address and verify the EIN. The provider also reviews the website, refund policy, pricing, and product list to make sure they follow card brand rules. Security steps like PCI requirements must also be in place. After these checks, the high risk merchant account can be approved.
Why some industries need high risk merchant accounts
Some industries carry higher financial risk, so they need high risk merchant accounts. Many standard payment providers do not support these businesses. The reason is higher exposure to disputes, chargebacks, fraud checks, or strict regulations.
Standard payment providers see them as risky to support. Providers keep lists of restricted industries. They do not serve prohibited industries. If a company falls into a flagged category, mainstream processors may refuse it or shut down its account. Banks also flag heavily regulated sectors as high risk due to legal uncertainties
Industries like CBD, gambling, and adult entertainment fall into high exposure categories. These businesses receive an industry risk label that needs special handling. For many of them, a high risk merchant account is the only way to accept card payments. Without it, they face constant account freezes when using regular services. High risk merchant accounts let them keep processing payments reliably despite the risk factors.
How merchant account providers classify high risk industries
Some industries carry higher exposure to disputes, fraud checks, and delivery issues. Because of this, merchant account providers review each business carefully before offering high risk merchant services. The review helps the provider understand how the business operates and what problems may appear during processing.
Each application goes through an industry review, a business check, a credit review, and a compliance check. Providers study the products offered, the service model, and the financial history. They also verify business identity, ownership details, and website compliance before making a final decision.
- Industry category check: Providers review product classification and service classification to see if the business comes inside a high risk category.
- Business verification: Identity checks, ownership verification, corporate documents, business license, certificate of formation, and EIN confirmation.
- Credit review: Personal credit report for late payments, collections, charge-offs, and bankruptcy record. Business credit file for trade lines, payment trends, and recent inquiries.
- Chargeback exposure: Expected chargeback ratio, dispute history, and refund activity.
- Fraud exposure: Fraud screening, suspicious activity checks, and transaction anomalies.
- Delivery risk: Pre-paid delivery, delayed delivery, and booking-based services.
- Pricing risk: High ticket sales or inconsistent pricing models.
- Volume risk: Projected processing volume, volume spikes, and seasonality patterns.
- Operational risk: Business model stability and service delivery history.
- Processing history: Monthly processing volume, average ticket size, transaction count, refund patterns, and prior processor notes.
- Compliance review: PCI security status, billing descriptor accuracy, refund policy, privacy policy, product disclosures, and age verification needs.
- Website audit: Product and pricing visibility, policy placement, secure checkout page, and presence of contact details and disclaimers.
After reviewing all information, providers decide whether to approve or deny the account. High exposure industries may receive conditional approval with reserves. Applications are denied when the industry does not fit provider rules or disputes are frequent. MATCH/TMF records from older accounts stop approvals. The review keeps the payment system safe and helps high risk merchants operate responsibly.
High Risk Merchant Account Industries
These are 10 industries that require high risk merchant accounts. Each faces unique challenges with chargebacks, fraud, or compliance that make specialized processing essential.
1. Travel and ticketing businesses
A travel or ticketing business deals with bookings in advance. They sell travel packages and event tickets, sometimes months before the date. This leads to a higher chance of cancellations and refund requests.
If trips are canceled or events change, customers may dispute the charges. Travel merchants also process high-value transactions. A vacation package or concert ticket can be expensive. These high-ticket sales mean bigger potential losses per dispute. Banks label travel as high risk due to these refund patterns and external factors like weather or delays.
2. Alternative product merchants
Alternative product merchants sell niche or regulated goods. These can include CBD oils, vaping products, or other unconventional items. Banks see them as high risk because of compliance challenges.
- Product labeling and ingredients: Sellers must label products accurately and verify all ingredients. Mislabeling can lead to legal issues or customer disputes.
- Shipping compliance: Many alternative products face shipping restrictions. For example, some ingredients cannot be shipped to certain regions, complicating delivery.
- Age restrictions: If products like e-cigarettes are age-restricted, the merchant must verify the buyer’s age. This added step increases complexity and risk.
3. Supplements and nutraceutical brands
Supplement and nutraceutical brands sell products like vitamins, herbal remedies, and wellness pills. These products face strict regulatory checks. Merchants must include health disclaimers and follow strict marketing rules. If a supplement promises big results, disappointed customers may demand refunds or file disputes.
Fulfillment can also be a risk factor. Some nutraceuticals have long fulfillment timelines if stock runs low. Customers waiting on products might issue chargebacks if shipping is delayed. Banks consider these brands high risk because of the higher refund rates and regulatory scrutiny.
4. High risk e-commerce stores
Certain e-commerce stores fall into the high risk category. These shops sell items that see more fraud or returns than average. Here are some of the examples of high risk e-commerce stores.
- Consumer electronics: High-value gadgets attract fraudsters using stolen cards, leading to chargebacks.
- Luxury goods: Expensive items (like jewelry) carry a high chargeback risk. Some buyers claim non-delivery of costly orders to get free refunds.
- Drop-shipped products: Stores that ship from overseas suppliers have long delivery times. Impatient customers may dispute charges if an order is delayed or not as expected.
5. Adult industry merchants
Adult industry merchants include adult content websites, subscription platforms, and adult product shops. Banks classify them as high risk due to age restrictions and legal implications. These businesses also see high chargeback rates, partly from customers later denying the purchase. Adult merchants must enforce strict age verification to prevent underage access. They also need to ensure content compliance with all laws and platform rules.
Billing transparency is a challenge in this sector. Many use discreet billing descriptors to avoid revealing the nature of the charge, but if the description is too vague it can lead to chargebacks. Mainstream processors refuse adult businesses, so specialized merchant accounts are essential for this industry.
6. Health and wellness brands
Health and wellness brands can range from fitness programs to alternative therapy clinics. They combine practitioner services (consultations or treatments) with related wellness products or plans. Many require upfront payment for a series of appointments or a wellness package. The risk comes when clients are unhappy with outcomes.
A customer might prepay for sessions and then request a refund if results are lacking. Missed or rescheduled appointments can also lead to billing disputes. This category deals with appointment billing challenges and customer satisfaction issues. Standard processors see the high refund potential and treat these brands as high risk.
7. Subscription and rebill merchants
Subscription and rebill businesses charge customers on a recurring schedule. They could be subscription box services, membership sites, or any service with regular billing. These models have higher dispute rates.
- Recurring payment cycles: Regular billing can lead to chargebacks if customers forget about the charges or feel they didn’t authorize continuous payments.
- Cancellation issues: If canceling a subscription is confusing or delayed, customers may file disputes out of frustration. Clear cancellation processes are vital to avoid this.
- Dispute volume: Overall, these services see more disputes than one-time sales. Customers may claim they canceled or didn’t receive expected value and initiate chargebacks.
8. Credit repair and financial services
Credit repair agencies and certain financial consultants are commonly in the high risk category. These businesses promise to improve credit scores or resolve debts. Strict laws govern how they operate, and many clients are financially distressed.
- Compliance rules: Credit repair agencies must follow specific laws (for example, not charging fees before providing results). Violating these rules can lead to disputes and fines.
- Service timeline: Improving a credit score or settling debts takes time. Impatient clients may issue chargebacks if they don’t see progress quickly.
- Verification requirements: Underwriters demand extensive proof for these businesses. Companies might need to show licenses, bonds, or other credentials to prove they operate legitimately.
9. Digital service providers
Digital service providers deliver intangible products like software, online content, or marketing services. These businesses face unique risks. Without a physical product or shipping proof, customers can dispute charges, claiming they didn’t receive what was promised.
Dispute exposure is high if a client is unhappy or has trouble accessing a digital service. For example, an online advertising service might have clients who file chargebacks if they feel the service did not deliver the expected results. With no tangible goods to show, resolving such disputes is harder. Banks classify digital services as high risk due to this challenge.
10. High-ticket coaching
High-ticket coaching refers to expensive consulting or mentorship programs. These can be business coaching courses, high-end training workshops, or personal development programs. Many cost thousands of dollars, which is considered high ticket pricing. So any chargeback involves a large amount. These programs deliver services over weeks or months. This longer service delivery timeline increases risk.
A client might pay upfront and then become unhappy before the program ends. If they feel the coaching did not meet expectations, they may request a refund or file a chargeback. The refund and dispute risk is high due to the large amounts and subjective outcomes.
What to consider when choosing a high risk merchant account provider?
Choosing the right provider is important for high risk merchants. Consider these factors when evaluating providers:
- Industry expertise: Look for a provider familiar with your business niche. A company that has experience with your industry knows the challenges you face and can offer tailored solutions.
- Fees and reserves: Compare the processing fees and other costs. Check the transaction rate (and any interchange markup), monthly fees, gateway fee, and PCI compliance fee. Ask about dispute fees as well. Also find out if they require a rolling reserve and how it will affect your cash flow.
- Contract and payout terms: Review the contract length and any early termination penalties. Check how frequently payouts are made (daily or weekly) and the settlement timing. A flexible agreement with no surprise clauses is ideal.
- Integration and features: Ensure the payment gateway from the provider integrates with your website or point-of-sale system. Verify support for your needs (for example, recurring billing, API integration, or a virtual terminal). Smooth integration will save you technical headaches.
- Security and fraud tools: High risk accounts need strong fraud prevention. Look for tools like Address Verification Service (AVS), CVV checks, or 3D Secure support. Providers that offer chargeback alerts or management tools can help you reduce losses.
- Reputation and support: Research the provider reputation. Read reviews from other high risk merchants. You want a provider known for reliability and fair practices. Also, check their customer support availability. 24/7 support or a dedicated account manager is valuable when you run into an issue.
Common problems high risk merchants face with regular payment providers
High risk merchants who try to use regular payment processors may face issues. Here are some common problems:
- Denied applications: Many mainstream processors refuse to approve high risk businesses at all. A merchant can spend time applying, only to be rejected due to the industry type.
- Sudden account freezes: Even if approved initially, a standard provider might freeze the account when they detect high risk activity. This can block your funds and halt sales without warning.
- Held funds and reserves: Traditional processors may hold your payouts or impose an unexpected reserve if chargebacks increase. This practice disrupts cash flow and can last for months.
- Strict chargeback limits: Standard providers have a very low tolerance for chargebacks (around 1%). Exceeding this threshold can lead to fines or immediate account termination.
- MATCH list risk: If a regular provider closes your account for risk reasons, they may place your business on the MATCH/TMF list. This “blacklist” makes it difficult to obtain another merchant account elsewhere.
Why high risk merchant accounts are better for these industries
High risk merchant accounts exist to support these challenging industries. They accept businesses that mainstream providers would reject, giving merchants access to credit and debit card processing. A travel agency or adult site can still take payments and grow their customer base instead of being shut. These specialized accounts also come with higher risk thresholds and help manage problems. High risk processors know chargeback rates might exceed 1%, so they are more tolerant as long as the merchant works to control disputes.
They provide advanced fraud protection and chargeback prevention tools to help merchants handle risk. Another benefit is stability. With a high risk account, you are less likely to face surprise freezes or termination due to a spike in sales or a few extra disputes. The provider expects some volatility and works with you to maintain compliance. Overall, a high risk merchant account offers a safer, more reliable processing environment for businesses that would otherwise have limited options.
Speak with a high risk merchant account provider
High Wire Payments is a high risk merchant account provider that specializes in these industries. We know the challenges your business faces and can provide a customized solution. If you operate in any of the sectors above, get in touch with our team. Contact us at +1 805-849-4799 for assistance. We provide a reliable payment processing solution for your business.
Conclusion
Running a business in a high risk category can feel challenging, but the right payment support turns those challenges into stability. A provider that understands high risk behavior helps you keep transactions smooth and your income safe.
These industries prove that growth can continue. A high risk merchant account keeps your payments running and supports your business.