High Risk Merchant Accounts: What's Behind the Label?

High risk merchant accounts and what's behind the label by Instabill

High Risk Merchant Accounts: What’s Behind the Label?

Which businesses are termed high risk by credit card processors?

The term high risk gets used often within the payments industry. It carries a certain stigma and is meant to convey a sort of status or label for merchants. The truth is, high risk isn’t a bad thing at all, and many entities within the industry actually respect so-called “high risk merchants” as legitimate businesspeople.

However, the reality is that others don’t, and there’s a very small market for high risk merchant accounts. If you’re considered to be a high risk merchant and need credit card processing solutions, be sure you know why your business is labeled high risk and which providers to do business with. The ones who won’t accept high risk merchants probably aren’t worth your time.

A Quick Sampling of High Risk Industries

Many high risk merchants earn that label according the industry they’re in. It is easier for financial institutions and banks to classify merchants by trade, so they’ve devised a common list of high risk industries to make the process easier.

Each industry can be radically different, anything from online gaming to nutraceuticals. Therefore, it is important to know why your industry is considered high risk, and what you can expect when applying for merchant accounts.

Adult Entertainment

Perhaps the largest and most prolific high risk industry is the adult entertainment category. Adult merchants earn their risk label purely by stigma and a lingering reputation. Of course, the legality of adult entertainment varies by country, but it’s not a particularly illegal business venture. So why are some acquirers hesitant to work with adult merchants?

Adult entertainment has a large capacity for fraud, especially for businesses selling services instead of goods. Credit card fraud is always a concern here, especially with many people eager to buy what the industry offers. This is but one of the reasons adult merchants earn high risk labels.

Online Pharmacies

People need medicine, and with the advent of e-commerce, they can get it much faster and easier online. Why wait for hours while your prescription is filled in-store? Online pharmacies provide a solution to that problem.

However, many online pharmacies process large amounts of transactions, contributing to high monthly volume. If a business makes too much money per month, they can be considered high risk. As crazy as it sounds, low risk businesses usually only process $20,000-$50,000 per month. If you process $100,000 or over, acquiring banks may steer clear from you due to concerns over fraud and liability.

Travel Merchants

Like many things, arranging travel services and buying vacation packages is easier than ever online. Many people scour the internet for deals, and merchants can really cash in on people’s need to get away. Despite what you may think, the travel industry is considered high risk.

Many travel merchants run into the same issue as pharmacy merchants—they process too much. But, it’s not the number of transactions that’s an issue, it’s the high ticket prices. Travel merchants are especially susceptible to chargebacks, which can rack up fees and lose merchants money. This is mostly why travel merchants are high risk.


You may think that being a part of a fast-growing industry is an attractive business quality, but not necessarily for e-cigarette merchants. E-Cig devices are relatively new, and because they involve users inhaling nicotine, they are subject to many tests and extensive research to determine health factors. The trouble is, most of these haven’t been conducted yet.

Acquiring banks may choose to turn away from e-cigarette businesses due to pending legislation that may impact the industry negatively. This uncertainty is enough to classify all e-cigarette and tobacco as high risk merchant accounts, as well as related industries like medicinal marijuana.

High Risk Merchant Accounts: We’ve got your solutions

Merchant accounts for high risk businesses can be hard to come by, but not if you’re looking in the right spot. Instabill offers customizable high risk payment processing solutions for most qualifying merchants, who could be able to start processing credit card transactions online in as little as three or four days. To learn more, visit our high risk merchant accounts page today.