Low-Risk Merchant Processor

Who Really Uses Low-Risk vs High-Risk Merchant Processors?

Getting paid is important right? To get paid, in any business, you will need to, of course, accept payment.

The most successful way to attract the most customers is to accept all types of payment, including credit cards and debit cards.

To accept and be paid for credit card transactions, you must find a credit card processor and obtain a merchant account.

What Are Merchant Accounts?

Merchants can process credit cards in 2 ways: In person, with a point-of-sale (POS) device or physical terminal, or as a card-not-present transaction, online or over the phone.

These payments can be submitted to the credit card processing company through the payment gateway via a physical or virtual terminal.

When applying for payment processing services, your type of merchant account will be distinguished as either low-risk or high-risk.

Payment processors determine your risk level based on key pieces of information about your business such as age, industry, credit score, reputation, and so forth.

With the risk level that has been assigned, your type of rates and account options will be provided by the processor.

Redeeming a merchant account can only be done through a merchant service provider. Based on your merchant account ranking, your processing provider could be an independent office that has relationships with multiple banks or it could be a singular bank or processor.

Depending on a bank’s comfort level, they can decide which type of merchants they will work with, and which ones they won’t. These decisions are on a case-by-case basis, and can constantly change.

A Broken Cigarette with Scattered Tobacco, high risk merchant

Who Are High-Risk Merchants?

As a bank’s decision on risk level is a case-by-case basis and can change, this means that one bank may consider a merchant high-risk while another may not.

Although this can seem like a tricky and non-definitive process, there are a few key factors that typically play a huge role in a merchant’s account status as being labeled high-risk.

A merchant account may be classified as high-risk due to one or more of the following factors:

  • If there are any specific government regulations on the products and services
  • If there are any specific age restrictions on their products and services
  • If the business itself or the general industry has a high chargeback rate
  • If there is a history of substantial fraudulent transactions
  • If the business is new 
  • If the business lacks financial stability
  • If the business lacks a quality reputation
  • If the business owner has poor credit
  • If the business accepts multiple currencies 
  • If the average credit card transaction is over $500
  • If the average monthly transaction volume is over $20,000
  • If the business sells to countries associated with high levels of fraud
  • If recurring plans or subscription payments are offered
  • If a merchant is on the MATCH list

If you are unsure if your business would have any of these risk factors, you may have a better idea of your risk status if your business lies in one of the following industries:

  • Adult entertainment and products
  • Brokerage firms
  • Cannabis
  • CBD
  • Vape products
  • Tobacco
  • Cryptocurrency
  • Dating services
  • Debt collections
  • High-dollar electronics
  • Gambling
  • Gun dealers
  • Life coaches
  • Medical practices
  • Multi-level and network marketing
  • Nutraceuticals
  • Pharmaceuticals
  • Telemarketing
  • Timeshares


A vast majority of payment processors and banks will typically deny a high-risk merchant because the account has the potential to cost the bank an unnecessary loss of funds.

However, it is possible to find processors that focus mainly on high risk.

If a high-risk merchant is able to find and be approved by a high-risk merchant processor, they may be subject to paying a higher interchange rate or processing fees.

You may be wondering how to become a merchant processor’s low-risk client if your business falls in line with some of the high-risk key factors.

Do not worry, being labeled as high-risk does not necessarily have to have a negative impact or connotation.

Due to the industry most high-risk merchants are associated with, their products can easily be marked up with higher ticket prices to compensate for these high-risk fees that are tacked onto their merchant accounts.

Men checking with a Magnifying glass risk wooden blocks with the word risk

What is a High-Risk Merchant Processor?

High-risk processors maintain relationships with acquiring banks that allow processing for high-risk industries. A high-risk merchant card processor would have the capabilities to approve and offer its processing services to high-risk merchants. Some high-risk processors may accept some risky businesses and not others. Based on how a bank feels, the decision will be a case-by-case scenario.

Even if your merchant account is approved by a high-risk processor, merchant services for high-risk industries may come with some stipulations. Your merchant account may be subject to rolling reserves, higher fees, longer contracts, and sometimes… pricey early termination fees, and your payment options may be limited for high-risk merchants such as online or over-the-phone card-not-present transactions.

Who are Low-Risk Merchants?

Now that we have an understanding of who high-risk merchants are, and the type of credit card processors they must use, we can dive a little deeper into the world of low-risk merchants and low-risk merchant processors.

A merchant account may be classified as low-risk due to one or more of the following factors:

  • If the average monthly transaction volume is less than $20,000
  • If the average ticket is less than $500
  • If the business accepts only one type of currency
  • If the business has low to zero chargebacks
  • If the business is in a low-risk industry and sells low-risk items or services
  • If the business has a positive reputation
  • If the business maintains consistent revenue and normal business days and operating hours

Low-risk merchants pertain to the vast majority of the following market industries:

  • Automotive
  • Convenience stores
  • Construction
  • Education
  • Food and beverage services
  • Healthcare
  • Hospitality
  • Household and office supplies
  • Personal care and beauty supplies and services
  • Retail
  • Pet supplies
  • Small businesses 
  • Most professional services


What is a Low-risk Merchant Processor?

Merchant accounts are ultimately labeled as low-risk if the bank and payment processor are confident that the business has a good reputation with consistent profit.

This will ensure the processor that their investment is secure.

The business must also reflect evidence that it will not be generating a high rate of chargebacks, fraud, or complaints.

Low-risk businesses show a small likelihood of racking up unpaid fees and costing the banks and processors money.

Most low-risk merchant services credit card processors only focus on national processing.

Business done outside of national borders can cause risk. This is why low-risk merchants must only deal in one form of currency.

However, low-risk merchant processors can also process high-risk merchants. Some credit card processors do business with both types of merchants.

Because of this, the processor will need to have outstanding relationships with a variety of banks that offer a multitude of payment services for the diversity in their business markets.

What To Do Next?

If you are looking into getting your business running and ready to accept all payment types, reach out to a credit card merchant processor through their customer service or sales departments to get more information on where your business lies, and if they can be of service to you.

Ultimately, whether your merchant account is labeled low-risk or high-risk, one is not definitively superior to the other.

Each type of merchant account has its benefits and its obstacles.

So long as a business properly serves its customers with appropriate pricing, products, and payment solutions, it will have a positive future ahead.

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Payment Solutions

ECS Payments is committed to providing quality merchant services.

Our aim is to be a “One Stop Shop” for all payment and product needs.

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