How high-risk merchant accounts can help Ecommerce businesses succeed

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

The ability to accept online payments is essential to the success of any business in the rapidly growing world of ecommerce. But what happens if payment processors classify your company as 'high-risk'? The challenges to success seem to grow overnight. 

Finding a payment processor that will work with you can be difficult if you operate in industries such as the adult entertainment, online gambling, or travel industry as well as many more. That's where high-risk merchant accounts come in - a solution specifically designed to help businesses operating in high risk-industries. In this article, we'll go in-depth on the advantages of high-risk merchant accounts for ecommerce businesses and explain why they're essential for long-term success.

What Are High-Risk Merchant Accounts and Why Does Your Ecommerce Business Need One?

Effective payment processing is an essential element of any successful ecommerce business. However, not all online stores are created equal, and some may be classified as 'high-risk' by payment processors and banks. Merchants in certain industries, including dropshipping, online dating, and travel, often encounter challenges with payment processing. Additionally, merchants with a history of chargebacks or fraudulent activity may also be deemed high-risk.

Key factors why your business may be labeled as high risk

Due to one of the following four key factors - industry, finances, billing model, or processing volume - or bad business practices, processors and banks may classify a company as 'high-risk'.

  • Industry: To evaluate the baseline risk of a business, underwriters typically assess the processing history of companies within the same vertical. This evaluation is based on the merchant category, which is identified by specific merchant category codes (MCCs). 
  • Processing volume: The number of annual transactions may determine where your business falls on a sliding risk scale, with more transactions indicating higher risk.
  • Financials: When evaluating a business, underwriters take into account factors like burn rate, debt to equity, and profitability.
  • Billing model: Underwriters typically consider recurring billings and card-not-present (CNP) transactions to be higher-risk than other transaction types.

Fortunately, high-risk payment processors provide a solution for ecommerce businesses that have been turned away by traditional payment processors. By partnering with a reputable high-risk merchant account provider like TailoredPay, businesses get access to the payment processing capabilities they need to thrive, free from the burden of potential rejection. 

While there are great advantages to a high-risk merchant account, it's important to also consider the potential drawbacks. To help you make an informed decision, we've created an overview of both the benefits and drawbacks.

Pros & Cons of A High-Risk Merchant Account


  • Lower risk of account termination
  • Better fraud & chargeback protection
  • Ability to process credit card transactions even with bad credit
  • Long-term growth opportunities


  • Higher processing fees than low-risk merchant accounts
  • A rolling reserve that can be held for up to 180 days (or longer in some cases) after account closure

Without a high-risk merchant account, ecommerce businesses eventually may face the risk of being unable to process payments. This can lead to lost revenue and even the failure of the business. Therefore, it is crucial for ecommerce businesses that fall under the high-risk category to consider the benefits of applying for a high-risk merchant account as a viable solution to their payment processing challenges.

Staying Ahead of the Competition: Why High-Risk Merchant Accounts Are Essential for Ecommerce Businesses in Today's Market

In today's highly competitive ecommerce market, there is a greater need than ever for reliable payment processing solutions. Businesses today face fierce competition, compared to earlier times when ecommerce was a less crowded market, making it essential to provide customers with a seamless payment processing experience.

Shopify Payments And High-Risk Payment Processing

Shopify has revolutionized the process of launching an online store, making it accessible to everyone. With its integrated payment processing service, 'Shopify Payments,' store owners can begin accepting payments right away without the hassle of applying for a separate merchant account. However, for businesses engaged in high-risk industries, there may be a drawback. Your merchant account with Shopify may be unexpectedly terminated without prior notice, leaving you unable to accept online payments. 

To continue using the Shopify platform and maintain a competitive edge in the ecommerce landscape, businesses may need to obtain a high-risk merchant account which often comes with higher fees compared to a standard Shopify merchant account. Although this may seem like a daunting prospect, for companies operating in high-risk industries, a tailored high-risk merchant account can be a secure and reliable option. These accounts typically provide robust fraud and chargeback protection measures, ensuring that businesses can operate with confidence and minimize financial risks.

How to Choose the Best High-Risk Merchant Account Provider for Your Ecommerce Business

When choosing a high-risk merchant account provider, there are several factors to consider.

  • Track Record  

Your first step in finding a suitable high-risk payment provider is to seek out one with a proven track record of working with high-risk businesses. This will give assurance that the provider is well-versed in the unique challenges and risks associated with your industry, and is capable of delivering customized solutions. Researching online reviews is a simple yet effective method to get an idea of the provider's reputation and reliability.

  • Fraud and Chargeback Protection Services

Selecting a provider with strong fraud and chargeback prevention measures is extremely important. Look for a provider who offers cutting-edge fraud screening and chargeback prevention tools, as well as dispute resolution services.

  • Customer Support

Choose a service provider that has experienced and knowledgeable support staff available around-the-clock to assist you with any problems or questions you may have. They can help you maintain seamless payment processing and prevent potential revenue loss due to downtime or other issues.

  • Competitive Rates

Try to find a high-risk merchant account provider with reasonable and transparent rates. The pricing structure should suit your business model and industry. Additionally, it's important to choose a provider that has the expertise to negotiate with payment processors and banks on your behalf, which can result in lower processing costs for your business. By considering these factors, you can find a trustworthy high-risk merchant account provider that will help support the success of your business.

Why Your Ecommerce Business Needs a Merchant Account to Thrive

In today's competitive ecommerce landscape, payment processing can make or break your business.

The last thing you want as the owner of an online store is for payment processing to hinder your expansion and success. By obtaining a high-risk merchant account, you can overcome obstacles that may prevent your business from thriving. Although high-risk merchant accounts often come with higher fees, they can protect your business and provide you with a lifeline by 

  • increasing your ability to process payments,
  • providing strong fraud and chargeback protection, and 
  • improving transaction rates.

You can get around payment processing challenges and grow your ecommerce business by choosing a reputable and trustworthy high-risk merchant account provider. With the right partner by your side, you can confidently navigate the payment processing landscape and position your business for long-term success.

This article was written in cooperation with TailoredPay