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

A high-risk merchant account is a payment processing account for businesses that banks and merchant service providers consider to have a high level of risk

There are several 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. Before you commit to any particular provider, it’s essential to understand the ongoing fees you’ll encounter.

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.

What are high-risk merchant accounts?

High-risk merchant accounts are specialised accounts issued by financial institutions to businesses that are at increased risk of high-value chargebacks (a special type of card refund that customers claim through their bank) or 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 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?

Each payment processor has its own standards for what makes a business high-risk. 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)

Which industries are considered high risk?

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

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

• backward
• forward

		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
2.9% + 30p transaction fee (standard rate)	From £19.95 per month (depending on features required) Transaction fees: 0.5%-1.5% for debit cards or 2.9% for credit cards	Transaction fees: From 1.50% + €0.15 High-Risk MCC Annual Fee (UK/EU): €950.00 annually
1-5 business days	3-4 business days	Up to 7 days

Quickly and easily compare high risk merchant accounts and get free, no-obligation quotes for your business Compare Costs

1. PayPal: best for a pay-as-you-go pricing structure

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

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 can take up to five days.

2. WorldPay: best for set monthly fees and regular payouts

A trusted merchant accounts brand, WorldPay provides payment processing services to over a million merchants worldwide. Renowned for its simple and transparent pricing, it also offers pay-as-you-go, monthly, and standard merchant packages.

Each package comes with different fees. For example, you can rent their card terminals for around £10-£17 + VAT per month, plus an upfront setup fee (around £0-£75).

Like PayPal, WorldPay also charges transaction fees for each sale you make, which start as low as 0.50% for debit card payments.

Check out our full Worldpay review for more information.

3. ccNetPay: Best for simple EU transactions

ccNetPay specialises in providing high-risk merchant accounts for gaming, pharmaceutical, and adult entertainment businesses. It’s also a great choice for businesses selling in the EU as it has partnerships with several European acquiring banks.

ccNetPay’s fees are transparent and readily available on its website, and it 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.

That said, its transaction fees are relatively high, and you may need to wait a few weeks for account activation – taking around two to three weeks in total.

High-risk merchant account fees

The fees that come with a high-risk merchant account ultimately depend on what kind of provider you use, as well as your business’s specific circumstances.

Here’s a partial list of high-risk merchant account fees – and whether they apply to brick-and-mortar and/or online payments:

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

High-risk merchant accounts are a very useful way for businesses in volatile or regulated industries to accept payments with little hassle.

Moreover, 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.

That said, they come with drawbacks too, including higher fees and longer processing times. Below are the main advantages and disadvantages of high-risk merchant accounts.

Pros of a high-risk merchant account

• Total account stability: goes through human underwriting before you take your first payment, making your account stable and unlikely to face sudden closures.
• Uncapped processing volumes: most high-risk merchant accounts are designed to handle large and sudden jumps in revenue, so they’re less likely to get flagged as suspicious.
• Better chargeback tolerance: most high-risk merchant accounts allow a higher chargeback threshold (around 2%-3%).

Cons of high-risk merchant accounts

• Mandatory rolling reserves: high-risk processors almost always enforce a 5%-10% rolling reserve, meaning the bank holds a proportion of your daily sales volume for up to 180 days before releasing it to you.
• Higher transaction and operational fees: high-risk processing rates typically range from 2.5%-6.0% per transaction, and there are also higher costs in chargeback penalties and annual bank registration fees.
• Longer payout time: as high-risk providers need a buffer window to screen for potential fraud, your payout schedule will likely be extended to a weekly or 7-14-day delay.

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.

While each provider involves different processes, here are the typical steps involved:

1. Prepare your website

As part of the approval process, an underwriter will have a thorough review of your business website. Therefore, you should ensure it features the following:

• Clear and accessible links in your footer for your refund/return policy, privacy policy, and terms & conditions.
• Your registered business name, address, business email, and clear customer support contact information.
• Secure SSL checkout capability, clear pricing structure, and visible card brand logos (Visa/Mastercard) must be functional in the checkout journey

Note: If you sell health products, your website must also feature standard legal disclaimers stating your items do not cure or treat medical conditions.

2. Choose the right provider

Remember that not all high-risk merchant accounts will accept your business. For example, a provider that accepts travel booking companies might also completely ban ingestible CBD or adult entertainment businesses.

You should research and contact high-risk merchant accounts or independent sales organisations (ISOs) that explicitly state they cover your exact Merchant Category Code (MCC). That way, you’ll know what your options are quickly and won’t have to spend time on applications for providers that won’t support your business type.

3. Gather your KYC documents

Under Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, high-risk underwriters require a lot of corporate and personal data. For this, you should have:

• Your official Certificate of Incorporation, Articles of Association, and your company registration number from Companies House
• 3-6 months of your recent business bank statements
• 3-6 months of processing statements from your previous payment gateway showing total sales volume, refund count, and chargeback ratios (for new businesses, you will need your business plan)
• A valid UK passport or driving licence and proof of address (usually a bank statement or utility bill within the last three months)

4. Submit your application

Once you have all the right documents, you’ll be ready to submit your application.

From there, an underwriter will review your business model, verify your processing history, and assess the bank’s financial exposure.

After a few days (usually 3-10 business days), the processor will give you an offer and outline your mitigation terms, which are:

• Your Interchange Plus (IC+) transaction rate
• The percentage of your Rolling Reserve (usually 5%-10% and withheld for 180 days)
• The frequency of your payouts and the settlement delay window (usually 7 days)

After you’re approved, you’ll be given your own Merchant ID (MID). You will also be able to connect the gateway to your chosen ecommerce platform through a secure plug-in or direct API integration. You should also carry out a few test transactions using real credit cards to ensure everything works properly.

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.

How we test card processing products and merchant services for small businesses

We tested 11 merchant account products and services to evaluate them in terms of functionality, usability, price, compliance, and more so we can make the most useful recommendations to small UK-based businesses.

Our rigorous testing process means these products have been scored and rated in six main categories of investigation and 25 subcategories – in fact, we covered 36 areas of investigation in total. We then gave each category score a ‘relevance weighting' to ensure the product's final score perfectly reflects the needs of our Startups.co.uk readers.

Our main testing categories for merchant account products and services are:

Compliance: the adherence of the merchant account product to relevant regulations and standards, such as data security, anti-fraud measures, and legal requirements.

Customer Support: the assistance and resources provided by the merchant account provider to users in resolving issues, answering questions, and providing guidance.

Customer Score: external customer opinion; the feedback and ratings given by customers who have used a particular merchant account. Also, the market position and reputation a merchant account holds.

Features: the functionalities and capabilities provided by the merchant account product, including online payment processing and payment gateway integration.

Taking Payments: the process and options available for accepting payments through the merchant account product.

Price: the cost associated with using the merchant account product, such as transaction fees, setup fees, monthly fees, and any additional charges.

The Startups product testing process

Final thoughts

If you run a high-risk business, it’s important to have the right merchant account to support you. This will help you process payments securely, reduce the risk of account freezes/shutdowns, and manage chargebacks more effectively.

While high-risk merchant accounts often come with higher fees compared to standard accounts, the right provider can offer reliable payment processing, strong fraud prevention tools, and responsive customer support to help your business’s payments run smoothly.

Make sure to take the time to compare providers – including fees, payment models and transfer times – so that you can find the right solution that keeps payments simple and supports your business as it grows.

We can help you find the right high risk merchant account for your business

Tell us what you need and easily compare leading providers

Get free quotes It only takes a minute