What Is a High-Risk Merchant Account?
A high-risk merchant account is a specialized type of merchant account used to accept credit card payments when a business falls into a category that banks and processors consider more likely to generate chargebacks, fraud, regulatory scrutiny, or refund disputes.
The key difference is underwriting. High-risk merchant accounts are reviewed more carefully and often require documentation, compliance checks, and risk controls to protect both the merchant and the bank.
Important: Being "high-risk" does not mean your business is illegal. It simply means the banking system views your business as higher exposure.
Why Do Businesses Get Classified as High-Risk?
Most merchants assume they are "normal" until they get declined. But banks classify risk based on historical data, dispute patterns, and industry trends. Here are the biggest factors:
1) Industry type
Some industries are automatically considered high-risk due to chargeback rates, legal complexity, or consumer behavior. Examples include CBD, peptides, supplements, firearms accessories, adult products, gambling, and travel.
2) High chargeback ratios
Banks closely monitor chargebacks because they are expensive and signal customer dissatisfaction or fraud. Even a short spike in disputes can get a business flagged.
3) Subscription billing and continuity programs
Recurring billing businesses are frequently labeled high-risk because customers dispute charges when they forget they subscribed or feel cancellation is unclear.
4) Large ticket sizes
Businesses with high average transaction amounts are riskier for banks because a single dispute can create major loss.
5) International sales
Cross-border transactions often have higher fraud and dispute rates, which increases underwriting scrutiny.
6) New businesses with limited processing history
New merchants can still get approved, but banks will require more documentation because they don't have past performance data to evaluate.
High-Risk vs Low-Risk Merchant Accounts: What's the Difference?
High-risk processing is not just "more expensive processing." It usually comes with different underwriting rules, risk protections, and settlement structures.
Approval Speed: Low-risk is often instant. High-risk requires underwriting (typically 2–10 days).
Stability: Low-risk can be unstable if category is flagged. High-risk is more stable long-term when properly approved.
Rates: Low-risk has lower rates. High-risk has risk-based pricing.
Reserve: Low-risk usually has none. High-risk may require rolling reserve depending on risk.
Chargeback Monitoring: Low-risk has basic monitoring. High-risk has strict thresholds and risk controls recommended.
Common High-Risk Industries
Here are industries that commonly require high-risk merchant services:
- Peptides & research chemicals
- CBD, hemp, and vape products
- Supplements / nutraceuticals
- Adult products and services
- Online gambling, sweepstakes, and gaming
- Travel and ticketing
- Firearms-related accessories
- Crypto and investment-related products
- Subscription-based eCommerce
- Debt repair, credit repair, and financial services
Why Stripe and Square Decline High-Risk Businesses
Many merchants first attempt to process payments using Stripe, Square, or PayPal. These companies are convenient, but they are not designed for true high-risk underwriting.
In many cases, high-risk businesses are allowed to sign up initially, then later flagged once volume increases or risk indicators appear. That's when merchants experience sudden shutdowns, frozen funds, or terminated accounts.
Reality check: If your business model is high-risk, "easy processors" are often temporary solutions. A properly underwritten high-risk merchant account is usually the safest long-term move.
What Underwriting Looks For (Approval Requirements)
Underwriting is the bank's risk assessment process. The stronger your business presentation and documentation, the faster and smoother approval becomes.
Typical documents needed:
- Government-issued ID for owners
- Business formation documents (LLC, Corp)
- EIN verification
- 3–6 months of bank statements
- Supplier invoices / sourcing documentation
- Website compliance review
- Processing statements (if you have previous history)
Website compliance matters more than you think
Underwriting often declines merchants not because of the product itself, but because the website appears incomplete, misleading, or non-compliant. A strong site should clearly show policies, contact information, shipping terms, and product disclaimers.
What Is a Rolling Reserve (And Why It Exists)?
A rolling reserve is when a processor holds a small percentage of your revenue for a set number of days. This protects the bank from losses due to refunds and chargebacks.
Example: If you have a 5% rolling reserve held for 120 days, and you process $50,000 per month, then $2,500 is held monthly and released after 120 days.
Reserves are common for new high-risk merchants. The goal is usually to reduce or remove reserves once your chargeback and refund metrics prove stable.
High-Risk Merchant Account Fees (What You Should Expect)
High-risk processing is priced based on exposure. While every case is different, here are the most common cost components:
- Processing rate: percentage + transaction fee
- Monthly account fee: sometimes included depending on setup
- Gateway fee: if using a payment gateway integration
- Chargeback fees: per dispute
- Reserve: may apply depending on underwriting
Tip: The cheapest quote isn't always the best. Many merchants get trapped in hidden fees, weak support, or unstable processing. A high-quality provider prioritizes stability, transparency, and long-term bank relationships.
How to Improve Your Approval Chances
If you want to increase your approval odds, focus on what banks care about: clarity, compliance, and predictable customer experience.
- Have clear policies: refund, shipping, privacy, terms
- Use a clean checkout flow: no hidden subscription terms
- Reduce disputes: improve descriptors, support, shipping speed
- Keep marketing compliant: avoid risky claims
- Be ready with documentation: bank statements + supplier invoices
How Unison Payment Solutions Helps High-Risk Merchants
High-risk processing is not a one-size-fits-all solution. The best setup depends on your industry, ticket size, monthly volume, refund rate, and whether you need subscription billing or international sales.
Unison Payment Solutions helps merchants by matching them with the correct banking partner, setting up the right payment gateway, and helping reduce the risk factors that cause shutdowns.
What we can help with:
- High-risk merchant account approvals
- Payment gateway integrations
- ACH + card processing setups
- Chargeback prevention guidance
- Website compliance support for underwriting
High-Risk Merchant Account FAQ
What makes a merchant account "high-risk"?
It usually comes down to chargeback history, industry category, regulatory exposure, ticket size, and subscription billing risk.
Can a new business get a high-risk merchant account?
Yes. Many new merchants get approved if their website is compliant and documentation is organized.
Do high-risk merchant accounts always require a reserve?
No. Some do, some don't. It depends on underwriting risk and processing history.
How long does it take to get approved?
Approval can range from a couple of days to a couple of weeks depending on the bank and documentation readiness.
Why do processors freeze funds?
Funds are typically frozen when risk models detect unusual patterns, disputes, or policy violations. A properly underwritten account reduces this risk.