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What is a high risk merchant account?

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? A high risk merchant account could be for you!

Card payments and merchant accounts go hand in hand. If you want to take card payments, you need to have a merchant account; whether that’s a shared merchant account provided by the likes of Square, or a private one hosted by a financial body, such as a bank. 

A merchant account acts as the middleman between your payment system and your business account – it’s a holding place where transactions can be validated, and from which chargebacks and refunds can be issued. 

If the industry in which your business operates carries a high chance of high value chargebacks, refunds, or fraudulent purchases – or you deal with high value transactions in general – banks will deem your business high risk. That’s when you’ll be issued a high risk merchant account. 

Additionally, if you (as the holder of the merchant account) or your business has a bad credit history, a bank will issue you a high risk merchant account – at least until you’ve had the chance to build your credit rating up. 

In this article, we’ll answer the question ‘what is a high risk merchant account?’, answer any further questions you may have regarding the topic of high risk merchant accounts, and clue you into some of the top high risk merchant account providers. 

If you’d like to dive straight into finding the best high risk merchant account provider for your business, you can do so quickly and easily, just by answering the questions in our questionnaire. 

Our team of merchant account experts have designed this questionnaire to help businesses like yours get the answers they need – pain-free. 

Once you’ve answered the questions, we’ll pair you up with the providers that best match your needs, and they’ll get in touch with quotes and more information for you to compare.



What is a high risk merchant account?

A high risk merchant account is a type of merchant account supplied by financial bodies to businesses that carry a higher risk of issuing high value chargebacks and refunds, or of falling victim to fraudulent purchases. 

They’re also issued to businesses that experience high volumes of monthly sales surpassing around £15,000, to those that carry out high value transactions in general, and to those who have a low credit rating. 

High risk merchant accounts are characterised by their higher fees. Financial bodies may also require you to keep a larger sum of money in the account, in order to ensure funds are available to cover the risk factors. 

Watch the video below to find out more. 




High risk merchant account vs regular merchant account

As we already mentioned in the ‘what is a high risk merchant account?' section, a high risk merchant account is characterised by both higher fees and a higher rolling reserve (the amount of money you should keep in your account).

But there are some other key differences between a high risk merchant account and a regular merchant account that you should be aware of.

If you’re unsure on which type of merchant account is right for your business, the table below will help you out.

High risk merchant accountStandard merchant account
For high risk businessesFor low risk businesses
For businesses that take above £15,000/monthFor businesses with lower monthly takings
Payments in multiple currencies acceptedPayments in one currency accepted
Suitable for businesses and owners with low credit scoresGood credit rating required
Suitable for digital and abstract product offerings (e.g. software, tickets, bookings)For the sale of lower value physical items (e.g. clothing, food, supplies)

If you’re still not entirely sure about whether your business qualifies for a high risk merchant account or a standard merchant account, or you’d like to find out which merchant account provider is best for your business, our comparison tool can help.

It was developed by our team of merchant account experts so business owners can find the right high risk merchant account provider for their needs, without the hassle of having to do hours of research themselves.

Over 1,500 businesses used our comparison tool to find a merchant account in 2020 alone. If it worked for them, we’re sure it’ll work for you. Head on over to the tool, answer a few simple questions, and it’ll pair you with the right providers based on your responses!


Who needs a high risk merchant account?

A high risk merchant account is required by businesses that take transactions which may involve a high risk of chargebacks, refunds, and fraudulent activity. Typically, these are businesses that deal with high value and/or abstract products, like bookings, bets, and software products. 

Here’s a non-exhaustive list of industries and businesses that will require a high risk merchant account:

  • Businesses that operate in the holiday space
  • Antique 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 downloading 
  • Nightclubs

Also remember that high risk merchant accounts exist to help business owners with poor credit ratings to start taking payments – whether that’s a personal credit rating or a business credit rating.


The best high risk merchant account providers

PayPal, WorldPay, and ccNetPay are three of the top high risk merchant account providers. 

Let’s see how they compare:

 
paypal

PayPal
worldpay

WorldPay
ccnetpay logo

ccNetPay
Summary
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 service for an unlimited number of card transactions
Fees
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

Payment transfer time
3-5 business days
Twice a week
Up to 7 days

PayPal

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

PayPal is a household name, so it’s already got the familiarity factor. The good news is, its high risk merchant account services are pretty good, and it doesn’t hide any of its fees. The bad news is, you’ll need several days to get your head around the PayPal 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 differs depending on whether you take an online payment or a physical in-store payment.

PayPal offers an all-in-one payments service, with 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 3-5 days.


PayPal pros

Familiarity factor

A pricing structure tailored to individual circumstances

No monthly fees

All-in-one commerce package

PayPal cons

Fees are hard to get your head around

Expensive to take payments in different currencies


2. WorldPay

Best for: set monthly fees and regular payouts

Another high risk merchant account with the familiarity factor, WorldPay has over 400,000 customers worldwide. It’s renowned for its security and simple, transparent pricing. It doesn’t charge you any more for accepting payments in foreign currencies, and it doesn’t charge for processing refunds. 

WorldPay offers bricks 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 go for a bespoke package, even the £45 per month package has a limit of 850 transactions. And if you want things like 24/7 support and advanced fraud protection, you’ll also need to have a look at getting a bespoke merchant package.

Check out our full WorldPay review.


WorldPay pros

Familiarity factor

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

WorldPay cons

24/7 help is an extra

Limits on number of transactions 

Pay-as-you-go fees are on the high side


3. ccNetPay

Best for: A simple pricing structure and EU transactions

ccNetPay specialises in providing high risk merchant accounts for businesses that operate within the gaming, pharmaceutical, and adult entertainment spaces. With partnerships with several European acquiring banks, it’s a good choice for businesses selling in the EU.

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 a higher annual fee of €950, and a longer payout time of around seven days.

Unlike WorldPay, there is no limit to the number of transactions you can take. However, you will need to make sacrifices with things like account activation times, and its fees are slightly on the high side.


ccNetPay cons

Very transparent pricing

Great for dealing with the EU

Popular with online service companies and pharmaceutical companies 

Take a limited number of transactions

ccNetPay cons

Its annual fee is on the high side

It can take a few weeks to activate your account


Still no closer to finding the best high risk merchant account provider for your business? Want a simple way to discover a list of suitable providers? This is where Startups.co.uk can help. 

We’ve been supporting small businesses for over 20 years, and have formed partnerships with a number of high risk merchant account providers that offer merchant services tailored to small businesses and startups. 

Finding out which provider is best for your business is really quick and easy. Just head through to our 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 quotes from suitable partners!


High risk merchant account fees

When comparing merchant account providers, you’ll need to pay special attention to the fees involved. Fees differ per provider, and are heavily dependent on your business’s circumstances. 

Here’s a non-exhaustive 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

How to get a high risk merchant account

A quick google of high risk merchant account providers will bring up a whole range of potential suppliers, but as we’ve established in this article, there’s a lot to consider when choosing the right one.

The most important thing to do is to compare merchant fees. The previous section on merchant account fees shows you just how many different types there are – they’ll differ for each provider, and change depending on your business’s circumstances. 

We know that it’s a pain to find straightforward, transparent pricing, and without it, you won’t be able to find the best high risk merchant account provider for your business. That’s why we’ve developed our comparison tool. 

It really is a simple way to cut through the noise, and receive high risk merchant account quotes that are tailored to your business. 

Just head on through to our short quiz, answer a few simple questions, and you’ll have all the information you need to make an informed decision in no time!


What is a high risk merchant account: a summary

Here’s the most important information you need to take away:

  1. A high risk merchant account is for businesses that take transactions which carry a high risk of high value chargebacks, refunds, or fraudulent purchases
  2. They’re also for businesses that carry out high value transactions in general, for those with a poor credit rating, and for those that accept payments in multiple currencies
  3. They usually incur a higher monthly or annual fee than a standard merchant account
  4. They all incur different fees and charges, which are based on whether you want to pay-as-you-go, pay monthly, or pay annually. Charges also depend on your business circumstances

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Aimee Bradshaw
Aimee Bradshaw

Senior Writer and Researcher

Aimee is Startups' resident expert in business tech, products, and services. She loves a great story and enjoys chatting to the startups and small business community. Starting her own egg delivery business from the age of 12, she has a healthy respect for self-starters and local services.

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