What are high risk merchant accounts and which are the best?

Looking to start a business in what's considered to be a high-risk industry? Have a bad credit history that you’re looking to remedy? You'll need a high risk merchant account. Get the lowdown on the top providers here.

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A high risk merchant account pretty much does what it says on the tin. It’s a merchant account for businesses that are considered high risk by banks.

There are loads of possible reasons for this – your industry might have a high volume of chargebacks (card refunds claimed through banks), trade in high-value international transactions, or have a poor credit history.

But whatever the reason, you’ll need a special high risk merchant account, and you’ll have to pay higher fees and deal with greater scrutiny.

This guide will cover what a high risk merchant account is, what makes an industry high risk, the best merchant account providers, and how to open a merchant account.

You can also use our ultra-useful free merchant account comparison tool to find the perfect high risk merchant account for your business. It takes less than a minute and there’s no obligation – just answer some questions about what you’re looking for, and receive bespoke merchant account quotes from trusted top suppliers.

What are high risk merchant accounts?

High risk merchant accounts are issued by financial institutions to businesses that have an increased risk of having to issue high value chargebacks (a special type of card refund that customers claim through their bank), or that are considered more likely to be victims of fraud.

You may also need a high risk merchant account if you have high monthly sales volumes (over £15,000), frequently conduct high value transactions, or have a poor credit rating/lack of credit history.

Because of the higher risk involved (or perceived higher risk), high risk merchant accounts charge higher fees and you may have to keep a larger sum of money in the account in order to ensure that enough funds are available to cover the risk factors.

To learn more about merchant accounts in general, check out our what is a merchant account guide.


What makes a business high risk?

To some extent, risk is in the eye of the beholder – each payment processor has its own risk standards, and it's possible some will consider your business high risk while others won't.

However, here are some of the warning signs providers look for:

  • Monthly sales above £15,000
  • Average credit card transaction value above £400
  • Need to accept multiple currencies
  • Poor credit rating or a lack of credit history
  • Digital or abstract product offering such as software, tickets or bookings
  • History of large chargebacks
  • Deals largely in international transactions involving countries with high chargeback risk (generally anywhere outside the UK, EU, US and Australia/New Zealand)

And, as we'll discuss below, there are a wide variety of industries that are considered high risk because of the greater likelihood of chargebacks or fraud.

Compare and save Do you already have a merchant account?

Which industries are considered high risk?

Some of the industries and businesses that will require a high risk merchant account include:

  • Holiday businesses
  • Antiques dealerships
  • Car dealerships
  • Vape shops
  • Electronics
  • E-books
  • Brokers
  • Consultancy services
  • Health and wellness products
  • Ticket and booking services
  • Money transfer companies
  • Agency services (e.g. marketing, accounting)
  • Music and software downloads 
  • Nightclubs

You'll also need a high risk merchant account if you've got a poor credit rating – whether that’s a personal credit rating or a business credit rating.


What are the best high risk merchant accounts?

Our in-depth research identified PayPal, WorldPay, and ccNetPay as the three best high risk merchant account providers. 

Let’s see how they stack up:

0 out of 0
Logo
Name
Summary
Fees
Payment transfer time

PayPal

WorldPay

ccNetPay

All in one commerce platform with no contracts or set fees

A super-secure platform that accepts payments in multiple currencies

Transparent, uncomplicated fees and unlimited card transactions

No set fee

Interchange fee per transaction, depending on card

0.2%-2%

Paid monthly

£19 or £45 depending on features required

Paid annually

€950

3-5 business days

Twice a week

Up to 7 days

1. PayPal

paypal

Best for: a pay-as-you-go pricing structure

Pros
  • Familiar brand name
  • A pricing structure tailored to individual circumstances
  • No monthly fees
  • All-in-one commerce package
Cons
  • Fees can be hard to understand
  • Expensive to take payments in different currencies

PayPal is a household name, so it should be a familiar brand for both you and your customers.

And its high risk merchant account services are pretty good overall, with no hidden fees.

Unfortunately, it might take you a while to understand PayPal's complex pricing structure

Instead of charging you a monthly fee for your merchant account, PayPal adds an extra percentage to the amount it takes off each transaction to cover any processing costs. This percentage varies depending on whether you take an online payment or a physical in-store payment.

Another key point is that PayPal offers an all-in-one payments service, including virtual terminal and payment gateway services.

This means that for each transaction, you’re instantly paid into your PayPal account. Transferring funds from your PayPal account to your business account takes about three to five days.


2. WorldPay

worldpay

Best for: set monthly fees and regular payouts

Pros
  • Familiar brand
  • Several pricing options, including pay-as-you-go and monthly payments
  • Offers a complete commerce package
  • Costs nothing to accept other currencies
  • Great analytics platform
Cons
  • 24/7 help costs extra
  • Limits on number of transactions
  • High pay-as-you-go fees

A trusted merchant accounts brand, WorldPay has over 400,000 customers worldwide.

It’s renowned for its security and simple, transparent pricing. It doesn’t charge you extra for accepting payments in foreign currencies, and it doesn’t charge for processing refunds. 

WorldPay offers brick-and-mortar businesses pay-as-you-go, monthly, and standard merchant packages.

Each package comes with different fees, with the pay-as-you-go package requiring you to pay a £150 upfront cost for a payment terminal (card machine).

While a rolling monthly contract is recommended for well-established businesses, unless you pay for a bespoke package, even the £45 per month package has a limit of 850 transactions.

And you'll also need a bespoke package for important features like 24/7 support and advanced fraud protection.

Check out our full WorldPay review for more information.


3. ccNetPay

ccnetpay logo

Best for: a simple pricing structure and EU transactions

Pros
  • Simple, transparent pricing
  • Makes EU transactions easy
  • Ideal for online service and pharmaceutical companies
  • Unlimited number of transactions
Cons
  • Relatively high annual fee
  • Account activation can take a few weeks

CcNetPay specialises in providing high risk merchant accounts for gaming, pharmaceutical, and adult entertainment businesses.

It’s a great choice for businesses selling in the EU as it has partnerships with several European acquiring banks.

Its fees are transparent and readily available on its website. ccNetPay makes it clear that the only differences between its low risk and high risk merchant services are that its high risk merchant accounts have a higher annual fee of €950, and a longer payout time of around seven days.

Unlike WorldPay, there are no limits on transaction volume.

However, fees are relatively high and you may need to wait a few weeks for account activation.


Still having trouble finding the best high risk merchant account provider for your business? Want a simple way to compare suitable providers? Startups.co.uk can help. 

We’ve been supporting small businesses for over 20 years, and have formed partnerships with some of the UK's leading high risk merchant account providers that offer merchant services tailored to small businesses and startups. 

Finding out which provider is the best fit for your business is really quick and easy. Just head over to our free comparison tool – we’ll ask you a few simple questions, like the value of the total transactions you take per month, and you’ll then receive bespoke, no-obligation quotes from our trusted partners.

High risk merchant account fees

When comparing high risk merchant accounts, you’ll need to pay special attention to the fees involved.

Fees differ per provider, and are heavily dependent on your business’ circumstances. 

To help guide your search, here’s a partial list of high risk merchant account fees – and whether they apply to bricks and mortar and/or online payments:

 Estimated amountBricks and mortarOnline payments
Merchant account fees – paid per transaction, monthly, or annuallyTypically £100 - £700 per year
Transaction fees – paid per transaction1.25% - 2.75% of each transaction
Payment gateway feesAround £20/month
Currency transfer feesAround 0.5% - 2% for Europe
Payment terminal rental Annual rental around £170
PCI compliance feeAround £20/month
Chargeback fees£5 to £15

What are the pros and cons of a high risk merchant account?

The drawbacks of a high risk merchant account are pretty clear – you'll face higher fees, a more complex approval process, and longer processing times, and you'll need to keep hefty cash reserves to cover potential losses from chargebacks or fraud.

So, what are the actual benefits of having a high risk merchant account?

Firstly, if you have a poor credit history, a high risk merchant account may be the only way you can be accepted for a merchant account and start rebuilding your credit.

More generally though, there are three key pros with high risk merchant accounts. You can:

  • Sell worldwide – Having a high risk merchant account allows you to accept multiple currencies and sell to clients in countries that are considered high risk.
  • Do business in high risk sectors – Some of the industries considered high risk are also hugely profitable, with gambling and ticket services notable examples.
  • Enjoy increased chargeback protection – For some standard merchant accounts, a single chargeback can result in a terminated account, but you'll have far greater leeway with a high risk merchant account.

How to open a high risk merchant account

A quick search of high risk merchant account providers will return a wide range of potential suppliers. But wherever you apply, you should expect a pretty lengthy process.

And you're going to need a lot of paperwork, including:

  • Company incorporation certificate
  • Shareholders' certificate
  • A chart that shows your company's organisational structure
  • Copy of passports and utility bills for local directors and shareholders holding more than a 15% stake
  • Processing history for at least the last six months (this should show the total value of transactions, the total volume of transactions, and the chargeback percentage)

Decisions are made on a case-by-case basis, with a variety of factors impacting what sort of offer you receive.


How to choose a high risk merchant account

Here are some key things to consider when comparing high risk merchant accounts:

Fees

Of course, price is always going to play a major factor in your choice of provider, but make sure you check the terms carefully to identify any hidden costs and work out how the pricing structure suits your business. Use hypothetical examples to work out how fees would play out in practice – what would you be charged for a £100 card transaction, for example, and how would those fees change if it was €100 or $100?

Monthly vs pay as you go

Most high risk merchant account providers offer both monthly fees and pay-as-you-go packages, and it's crucial you select the model that best fits your business. Generally speaking, a pay-as-you-go plan is more suited to companies with low transaction volumes, while paying a monthly or annual fee works better for larger, more established companies – but you should check to see how each option stacks up for your business.

Payment transfer time

It's easy to overlook this, but payment transfer time is hugely important for most businesses. Quite simply, this is how long it takes for money to move from the merchant account to your bank account – which could take anywhere from a few days to a week. This has major cash flow implications, and needs to be checked before you sign up.


Need a quote?

If you need a hand finding the right high risk merchant account for your business, then our expertly designed free comparison tool can help.

Just answer a few simple questions and receive a range of tailored quotes from trusted, leading high risk merchant account providers.

It only takes a minute and could save you hours of research.

Frequently Asked Questions
  • What is considered a high risk merchant account?
    A high risk merchant account is required by businesses with a poor credit history, that operate in certain industries, that have high transaction values, or that do business in multiple currencies. It works the same way as a standard merchant account, but has higher fees and a more complex approval process because of the greater risk for the issuing financial institution.
  • How do I open a high risk merchant account?
    You apply for a high risk merchant account online – a quick search should give you lots of options to choose from. You should expect a lengthy approval process and be ready to supply lots of paperwork, including transaction history for at least the last six months.
  • What does high risk transaction mean?
    A high risk transaction is a transaction with a greater risk of fraud or a chargeback refund. High risk transactions are categorised by the industry involved, the value of the transaction, the type of product/service being bought and sold, and the currency of the transaction. If you conduct high risk transactions, then you'll need a high risk merchant account.
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Alec is Startups’ resident expert on politics and finance. He’s provided live updates on the budget, written guides on investing and property development, and demystified topics like corporation tax, accounting software, and invoice discounting. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, and writing a wide variety of freelance pieces.

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