Updated December 2024

High-risk merchant account fees are usually higher than their low-risk counterparts, but the added premium gives you sustainable solutions that you need to accept credit cards. For high-risk merchants, fees come in a few forms. Nonetheless, your payment processor often bundles them to simplify them and easily view monthly totals.

Why is my Business Considered High-Risk?

Payment processors charge higher fees for high-risk accounts because they processors take on additional risk by working with them. These risks include high chargeback rates, reputational risk for the processor, and increased risk of fraud. This means that often a company that you wouldn't think fit the bill as a high-risk merchant may be deemed one. For example, a company that is a subscription service provider or an e-commerce company that sells clothing may both be considered high-risk merchants because of the high rate of chargebacks.

To account for these added risks, payment processors won't allow high-risk merchants to use a traditional merchant account. Instead, the company will decline them or require them to work with high-risk merchant services to process credit card payments. These accounts come with higher account fees because of the higher risk taken by the bank.

Standard Fees for a High-Risk Merchant Account

Additional high-risk merchant account fees show up in two ways. First are fees that stay static no matter how risky payment processors consider your company. These fees include:

Static Fees

Refund Fees:

Many high-risk merchant account providers charge an additional fee for any refund. This means that not only are you, the merchant, not refunded for the initial payment processing fees, but they may charge you an additional fee to process the refund. Consider this into consideration with deciding on your pricing strategy to ensure that refund fees on your high-risk account don't put you into the red.

Service and PCI Compliance Fees

If you plan on accepting credit card payments, you are automatically required to be PCI compliant, according to the Payment Card Industry Data Security Standard. PCI compliance fees vary by provider, but you can always expect to pay a fee if you don't meet PCI standards. Additionally, some processors may also charge high-risk businesses additional PCI fees. These depend on whether or not your processor offers PCI compliance to your company as a service.

Security Fees

Many processors offer additional security measures to accounts deemed high-risk. You'll pay higher fees to use these services, but they are typically a flat rate. If you have a high-risk business that could benefit from services such as chargeback protection, this might be a good option for you.

Registration or Set-up Fees

Your payment processor may charge a fee to set up high-risk accounts and accept credit card payments. These fees are a flat rate for all high-risk businesses, regardless of the category. However, not all payment processors charge this fee, so it's worth shopping around.

Early Termination Fees

Most processors charge an early termination fee if you end the merchant contract early. This is a fairly standard fee and is typically the same across both high-risk and low-risk merchant accounts. That's because the cost of closing an account is one of the few things that isn't different for a high-risk business. It's important to keep in mind that you will pay an early termination fee if you close your account.

Fees That May Change Based on the Risk Level of the Merchant Account

High-risk businesses should also plan on paying fees that depend on the risk level the processor is taking on. These fees include:

Chargeback Fees

This is one high-risk merchant account fee that high-risk businesses have control over because these fees are only charged when you lose a sale. When this happens, the processor will charge you to refund the money. The more chargebacks you have, the higher the processing fees will be in total.

Reserve Fees

You can expect to pay more for this type of fee if you are in a high-risk industry. As is typical, low-risk accounts will pay the lowest fees for this service if they have to pay them at all. Reserve fees are standard for high-risk merchants, and they vary based on the type of reserve your processor uses.

So, what is a reserve? A reserve is basically a security deposit that protects the bank or other financial institution. It is used to cover chargeback disputes. Most reserves are set up as rolling reserves, which means that the processor holds a percentage of each credit card deposit, anywhere from 5% to 15%, depending on the risk level of the merchant account. After a set time, usually 6-12 months, the money not used to cover disputes is returned to the merchant.

Monthly Account Fees

Not all high-risk merchant account providers charge these fees. However, if they do, they typically vary by your risk level.

Transaction fees

This is another common type of high-risk merchant account fee. Once again, the risk level of the merchant account determines how much you'll pay.

What Is A Normal High-Risk Processing Fee?

Standard high-risk payment processing fees are very similar for mainstream processors. Paypal, Square, and Stripe are some of the top competitors in the field so they keep their prices very similar.

As you can see, all of the rates are very close to each other, and have become pretty much a standard in the industry. However, these merchant accounts don't consider companies in high-risk verticals.

High-Risk Merchant Fees

Because major credit card processing companies won't allow you to run sustainable accounts using their services, a slight premium is associated with high-risk merchant fees. These usually range from 1% to 2% above the standard rates, which puts them at 4%—5.5% on average. Additionally, the average cost per transaction is similar to major providers, at $0.15 – $0.30 per transaction.

Nonetheless, high-risk merchant accounts are a critical tool for any company that wants to accept credit cards.

High-Risk Payment Processing

High-risk verticals are companies that have increased risk factors from the banking side. In fact, if you try to open a merchant account using one of the above companies, and you break the Terms and Conditions by being in a different industry than what they allow, your merchant account can get dropped.

Common High-Risk Industries

Multiple industries are considered high risk due to different reasons. Those reasons might include age restrictions, state regulations, or reputational risk. In any case, there are merchant account providers that underwrite custom solutions for these types of businesses. If your company is on the list below, reach out to Zen Payments for your payment processing:

• Adult Industry and Products
• Alcohol
• Auto Warranties
• Bad Credit
• Bail Bonds
• CBD/Hemp
• Credit Monitoring
• Credit Repair
• Computer Software
• Continuity Billing
• Collections
• Cryptocurrency
• Dating
• Debt Collection, Consolidation, or Repayment
• Document Preparation
• E-Commerce
• Electronics
• Entertainment
• Firearms
• Gambling
• High Volume
• Multi-Level Marketing (MLM)
• Nutraceuticals
• Pawn Shops
• Sports
• Subscriptions
• Tech Support
• Timeshare Exit Services
• Tobacco
• Travel
• Vaping

Lower Your Processing Rates

Once you determine your company is high-risk, you’ll want to find ways to lower your processing rates. There are a few ways to do this and they all involve lowering your risk profile.

The easiest way is to improve your credit. Raising your credit score can move you to the low-risk category if you are considered high-risk because of your poor credit.

You may also be considered high-risk because you have no credit history. In this case, you can lower your risk level over time by setting up a high-risk merchant account and operating as a high-risk merchant until you have the history to prove you should be considered low-risk.

If you are in a high-risk industry, it may not be possible to lower your risk completely, but you can still take some steps. Lowering the number of chargebacks and protecting against fraud can reduce your risk profile and lower your fees.

Why Set Up a High-Risk Merchant Account with Zen Payments?

At Zen Payments, we specialize in working with high-risk merchants. We have the experience and expertise to set you up to accept credit or debit cards quickly and with lower fees.

Our merchant service specialists are the best in the business and will work with you from start to finish to get your account approved!

High Approval Rates

Expansive Network of Banks

Versatile Solutions

Quick Approvals