What Makes a Business "High-Risk"?
Banks classify businesses as high-risk based on several factors:
Industry Type
Some industries have historically higher chargeback rates, fraud, or regulatory issues:
- CBD and cannabis
- Nutraceuticals and supplements
- Gaming and gambling
- Adult entertainment
- Travel and timeshares
- Firearms and ammunition
- Debt collection
- Tech support
- Subscription boxes
Business Model
Certain business models carry higher risk regardless of industry:
- Subscription/recurring billing
- High-ticket items
- International sales
- CNP (card-not-present) only
- New businesses with no processing history
Processing History
If your business has:
- High chargeback ratios (above 1%)
- Previous account terminations
- Fraud incidents
- MATCH list placement
Why Traditional Processors Decline You
Banks are in the business of minimizing risk. When they see "high-risk," they calculate potential losses from:
- Chargebacks (they're liable if you can't pay)
- Regulatory fines
- Fraud
- Reputational risk
For a bank processing millions of merchants, it's easier to decline borderline accounts than underwrite them properly. That's not a judgment on your business—it's just risk management at scale.
How High-Risk Processing Works
High-risk processors work differently:
Specialized Underwriting
They have underwriters who understand high-risk industries. A CBD business isn't automatically suspicious—it's evaluated on its actual risk factors.
Banking Relationships
High-risk processors work with acquiring banks specifically willing to take on higher-risk merchants. These banks charge more but accept more.
Offshore Options
For extremely high-risk industries, offshore merchant accounts (based outside the US) may be available. Higher fees, but often the only option.
Higher Reserves
Your processor may hold a percentage of your processing (typically 5-10%) in reserve to cover potential chargebacks. This is released over time as you prove reliable.
How to Get Approved
1. Work with a High-Risk Specialist
Don't keep applying to mainstream processors. Work with a company (like us) that specializes in your industry.
2. Prepare Documentation
- Business license
- 3-6 months bank statements
- 3-6 months processing statements (if applicable)
- Voided check
- Government ID
- Website URL (for eCommerce)
3. Clean Up Your Website
Underwriters review your site. Make sure:
- Contact info is prominent
- Refund/return policy is clear
- Terms of service are present
- Product descriptions are accurate
- SSL certificate is valid
4. Be Honest
Don't hide your business type. Misrepresentation will get you terminated and MATCH-listed. High-risk processors expect to see high-risk businesses.
5. Show Chargeback Prevention
If you have prevention tools (alerts, fraud screening, 3D Secure), highlight them. Shows you're managing risk proactively.
What to Expect
Processing Rates
High-risk rates are higher—typically 3-6% vs 2-3% for standard. This reflects the bank's increased risk.
Monthly Fees
Monthly fees may be higher ($25-50+). Some processors charge risk premiums.
Rolling Reserves
Expect 5-10% held in reserve initially. Reduced or released after 6-12 months of clean processing.
Volume Limits
New accounts often start with caps. Prove yourself and limits increase.
Longer Approval Time
High-risk underwriting takes 3-7 business days vs 24-48 hours for standard.
Red Flags to Avoid
Watch out for processors who:
- Promise unrealistically low rates for high-risk
- Don't ask about your business model
- Approve instantly without underwriting
- Can't explain their banking relationships
- Have no industry references
These often end in account terminations when the bank realizes what you're selling.
Getting Off the MATCH List
If you're on the MATCH list (terminated merchant file), your options are limited but not zero:
- Some offshore processors accept MATCH merchants
- After 5 years, you're removed from MATCH
- Some domestic banks will review case-by-case
Avoid getting MATCH-listed in the first place by working with processors who understand your industry from the start.
Bottom Line
High-risk doesn't mean impossible. Thousands of high-risk businesses process payments successfully every day. The key is working with processors who specialize in your industry and can properly underwrite and support your account.