High Risk Merchant Accounts – Everything You Need to Know

Monneo Digital Banking

The payment processing industry has drastically expanded as more and more trade is being conducted online. Online businesses are required to establish e-commerce payment systems or merchant accounts as part of their business operations. Some businesses are required to obtain a higher risk merchant account because of their activities and other factors.

The global pandemic resulted in a surge of e-commerce activity and a surplus of new customers requiring high risk merchant accounts. The e-commerce sector is anticipated to continue to grow, alongside high risk merchant account providers.

The following article provides a high level summary of high risk merchant accounts to help readers better understand the basics of merchant accounts and requirements for a high risk account in the UK.

Table of Contents

What is a high risk merchant account

A high risk merchant account is a merchant account given to an online business that is determined to be of greater risk for fraudulent related charges and chargebacks. The level of risk is determined based on the nature of the business, its financial history, business model and its location.

A merchant account is essential for any online business. It allows an online business to accept and process electronic payment transactions for a fee. A business must partner with an acquiring bank that facilitates all communications related to electronic payment transactions. However, not all businesses are treated equally as some have greater risks associated with them than others.

Understanding the difference between low and high risk

The difference between high and low risk merchants comes down to risk identification. A high risk merchant account means that the payment provider has determined you are at a high risk of receiving chargebacks and fraud, while a low risk merchant accounts mean you are at low risk. Many of the factors that make a business high risk are not things that can be changed. A high risk processing merchant account usually has higher fees associated with it but it also means you have more freedom and flexibility regarding sales.

How is risk level determined

When a business applies for a merchant account they essentially go through an underwriting process. Although each merchant will have its standard and determinants of risk, several known factors are outlined below.

Determinants of Risk

Low Risk Merchant

  • Average monthly sales are less than $20,000
  • Average credit card transaction is less than $500
  • Accept one currency
  • Payment page is hosted by a payment service provider
  • Products sold are low risk
  • Country is considered low risk
  • Use 3D secure to prevent fraud Returns and payments are kept to a minimum

High Risk Merchant

  • Average monthly sales exceed $20,000
  • Average credit card transaction is over $500
  • Excessive chargebacks
  • Accept multiple currencies
  • Sales are seasonal or recurring
  • Sell goods or services to customers in customers with high levels of fraudIndustry is usually associated with high returns or chargebacks
  • Bad credit history
  • New merchant with limited history

High risk examples (businesses and industries)

There are several businesses and industries that are automatically considered high risk because of the nature of their business. For example, subscription services are high risk because of the number of chargebacks from customers who sign up for a free trial, forget, get charged and request a chargeback. The following table captures a few examples of high risk and low risk industries.


High Risk Industries

Low Risk Industries

  • Books
  • Stationary
  • Household items
  • Clothing

How to get a high risk account

To get a high risk merchant account, you will need to apply at an acquiring bank or a payment service provider and fill in their application form and provide the required documents. The application process is fairly short and simple but it is important to be prepared.

Documents required

Most applications will require documents and related information about your business and all owners.

What to look for in a high risk merchant account

A merchant account should meet the needs of your business. It is important to take into consideration fees, customer service, features, and security. High-risk merchants are typically charged a  higher rate, given the increased level of risk. It is important to understand what types of fees you may be charged (e.g. set-up fee, monthly minimum fee, cancellation fee, chargeback fee, and gateway fee). The best high-risk merchant account providers will provide an onboarding process to help you set everything up and ongoing customer support.

Why choose Monneo

Monneo was developed to meet the needs of online merchants, giving them access to bank accounts and virtual IBAN’s from leading banks they can trust. We provide access to a network of European and International banks to facilitate all of your incoming and outgoing UK, European and International payments. Scale your virtual IBAN accounts as and when your business needs.

Monneo cares about safety and mitigating risk. Our single interface allows users to have multiple IBAN accounts that are linked to a safeguarded bank account to ensure funds are secure at all times. With our digital banking solutions you benefit from:

Conclusion and Next steps

If you’re business is considered high risk, don’t panic. It is not as bad as it sounds, as there are many acquirers whose sole purchase is to provide high risk merchant accounts.

If you are interested in learning more about Monneo reach out to our team of experts. Our specialists are ready to answer any of your questions and help you navigate the process. 

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