TL;DR Being labeled a high risk business doesn’t mean you’re doing something wrong; it means your industry, chargebacks, or processing history raise red flags for payment processors. Key factors include industry type, chargeback ratios, MATCH list status, credit history, international sales, and high-ticket transactions. With the right high risk payment processing provider, you can still secure stable, compliant, and cost effective high risk payment processing.
Understanding the Factors That Shape High Risk Merchant Account Profiles
The Surprising Label Nobody Wants
If you’ve ever applied for a merchant account and been told your business is “high risk,” you probably felt a knot in your stomach. For many business owners, it’s not just confusing, it’s frustrating. After all, you’re not running a shady operation, you’re just trying to process payments like any other company.
But in the eyes of banks and payment processors, risk isn’t about your intentions. It’s about numbers, patterns, and probabilities. High chargebacks, certain industries, or even where your customers live can suddenly make you a “high risk merchant.”
So what actually makes a business high risk? And why does that label matter so much? Let’s break it down in plain English—because understanding the rules of the game is the first step to playing it smarter.
The Main Factors That Make a Business Need a High Risk Merchant Account
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Industry Type
Some industries carry reputational baggage or higher financial exposure. Even if you run a perfectly clean operation, being in one of these verticals can land you on the high risk payment processing list.
Examples include:
- Cannabis and CBD
- Nutraceuticals and supplements
- Firearms and ammunition
- Travel and ticketing
- Adult entertainment
- Subscription box services
- Warranty and extended service plans
Why? Because regulators scrutinize these sectors more closely, or because they tend to have higher refund and chargeback rates. Payment processors see patterns, and those patterns become rules.
- Processing History
Your past processing behavior is a predictor of future performance. If you’ve had frequent disputes, refunds, or sudden volume spikes in the past, underwriters will flag you.
Even something as simple as rapid growth can look suspicious. If you processed $50,000 a month last year and suddenly hit $300,000 this year, processors may wonder: Is the business scaling sustainably, or is this a red flag for fraud or instability?
- Chargeback Ratio
This is one of the biggest culprits. A chargeback ratio over 1% (meaning more than 100 disputes per 10,000 transactions) usually sets off alarms.
High chargebacks can happen for legitimate reasons—like customers misunderstanding billing descriptors, or industries with more impulse purchases—but processors don’t see nuance. They see risk.
Tip: Proactive fraud prevention, transparent billing, and clear refund policies are critical if you want to keep chargebacks in check.
- MATCH List Status
Ever heard of the MATCH list? It’s a sort of “blacklist” maintained by Mastercard. If a business gets terminated for fraud, excessive chargebacks, or other violations, its name can appear here—and once you’re on it, every processor will see it.
Being on the MATCH list doesn’t always mean you did something wrong. Sometimes it’s the result of an error or even a business partner’s missteps. But if you’re listed, you’ll almost certainly be labeled high risk until it’s resolved.
- Credit History
Just like lenders check your credit score before approving a loan, processors check your business (and sometimes personal) creditworthiness.
Poor credit, bankruptcies, or missed obligations raise concerns about financial stability. Even if your operations are solid, a rocky credit background increases the perceived risk of nonpayment or default.
- International Sales
Selling outside your home country can expand your customer base—but it can also expand your risk profile.
International transactions are more prone to fraud, currency disputes, and regulatory differences. If a significant portion of your sales comes from abroad, processors will add that to the risk column.
- High-Ticket Transactions
Selling high-value items like luxury goods, event packages, or expensive electronics creates more financial exposure per sale.
From a processor’s perspective, a $5,000 chargeback is much more painful than a $50 one. Businesses with high ticket transactions are often considered high risk by default, even if disputes are rare.
Why Being Labeled for High Risk Payment Processing Matters
Being classified as high risk isn’t just a label—it directly impacts how you can operate:
- Higher Fees: Expect increased processing rates and reserve requirements.
- Stricter Underwriting: Applications may require more documentation, background checks, and financial reviews.
- Potential Holds: Funds might be delayed or withheld to cover possible disputes.
- Limited Options: Many mainstream processors won’t approve you at all.
The good news? Specialized high risk payment processing providers exist and if you find the right partner, you can still process payments efficiently and compliantly.
How Businesses Can Manage Their Payment Processing Risk Profile
You can’t always control your industry, but you can manage the factors that influence your risk rating. Here’s how:
- Keep chargebacks low by offering clear refund policies and transparent billing.
- Maintain steady processing history without sudden unexplained spikes.
- Stay off the MATCH list by adhering to processor rules and resolving disputes proactively.
- Build strong credit history and pay obligations on time.
- Work with a provider experienced in high risk industries, one that understands your challenges rather than penalizes you for them.
Frequently Asked Questions (FAQ); High Risk Payment Processing
Q1: What does “high risk” mean in payment processing?
High risk means a business is more likely to experience fraud, chargebacks, or regulatory issues, making payment processors cautious.
Q2: What industries are considered high risk?
Cannabis, CBD, firearms, adult entertainment, nutraceuticals, travel, and subscription models are common examples.
Q3: How many chargebacks are too many?
Generally, if your chargeback ratio exceeds 1% of total transactions, you’re at risk of penalties or account termination.
Q4: What is the MATCH list?
The Mastercard MATCH list flags merchants terminated by previous processors for violations. Being on it makes opening new accounts much harder.
Q5: Can my business move off the high-risk list?
Yes, in some cases. Improving processing history, lowering chargebacks, and maintaining compliance can help—but some industries will always be classified as high risk.
Q6: How do I get approved for a high-risk merchant account?
By partnering with a processor that specializes in high risk businesses. Be ready to provide documentation like bank statements, processing history, and business licenses.
Q7: Do international sales automatically make me high risk?
Not automatically, but heavy international volume increases fraud potential, which usually raises your risk profile.
High Risk Payment Processing, Made Easy
Being labeled “high risk” doesn’t mean your business is doomed, it just means you need a payment partner who understands your industry and has solutions tailored for you.
At Bankcard International Group, we’ve spent decades helping high risk merchants from cannabis retailers to nutraceutical companies find stable, compliant high risk payment processing solutions. If you’re struggling with high fees, account denials, or unclear guidance, we can help you navigate the process with transparency and expertise.
Ready to explore your options? Reach out today for a consultation and see how the right payment partner can turn “high risk” into high potential.
