Getting a high risk merchant account approved can be a challenging process if you don’t know what steps you need to take in order to get the approval. One of the most common misconceptions regarding high risk merchant accounts is that these merchants have done something personally wrong but that is not the case. Banks and institutions that open merchant accounts label businesses in certain categories as high risk as there is higher risk of fraudulent transactions, chargebacks and other such issues in these industries as per the long term data collected by the banking industry.

The banking industry wants to deal with secure and stable merchants and this is the reason, they try to avoid opening accounts for businesses that are deemed to have higher risk. However, it does not mean that you can’t open a merchant account if you have a business that is categorized as high risk by the banking industry.

Here is a step-by-step breakdown of what you need to do in order to open a high risk merchant account.

Establish a Legal Business Entity

The first step in the process is to open a legal business entity that can either be a corporation or a limited liability company or any other type of business entity. For this, you will need to do some paperwork.

After setting up your legal entity, you will need articles of incorporation as well as your certificate of incorporation in order to get a federal tax identification number (TIN).

Obtain the Necessary Documents

Once you have set up a legal business entity and received a federal tax identification number, you will need some other paperwork to apply for your high risk merchant account. In most cases, you will need your study certificate of incorporation, articles of association, bank statement and copy of photo identity card. Some merchants may also ask you to provide a business plan.

If you have an established business and your company already has a processing history, you will also need to keep those details ready.

Write Down Your Needs

You need to be extremely careful about the services and equipment needed by your business when you are applying to open a high-risk merchant account such as with Here is what you need to think about when applying for a high-risk merchant account.

If you have a brick and mortar business, you are going to need a credit card terminal as most of the customers prefer to do their transactions through their credit cards. Also, make sure you get an NFC capable terminal for contactless payments as these are likely to be the future. Another thing you need to consider is whether you need a mobile payment solution. A mobile payment solution is needed for businesses that are always on the go. You will also need a POS system for integrating your online and in-store sales. If you plan to sell things online, you will need to get a payment processing solution for your online sales.

Find a Specialist

Like other industries, there is also a category of merchant account providers that specialize in providing accounts for high-risk businesses. They understand the unique requirements of high-risk businesses and cater to those businesses though it comes at a higher cost. The benefit of dealing with specialists is that they are already aware of your status and your chances of approval are high when you deal with a merchant account provider specializing in high-risk businesses. You can easily find such providers by searching online.

Keep in mind that you will need to pay higher costs as compared to merchants that are not categorized as high risk. So, be prepared for higher costs. However, it does not mean that you need to agree to the whims and fancies of the merchant account provider. Take a look around and find out the typical fees charged by providers in your industry and make sure that your account provider is not charging higher than the average rates for your industry.

Shop Around

Being in a high-risk business does not mean that you don’t have a choice and are limited to only a few merchant account providers. As mentioned above, there is a whole industry that caters to high-risk businesses which means you have a lot of options. Therefore, it is recommended to shop around in order to get a merchant account with the lowest fees.

Make sure you review the merchant agreement before signing up. Some merchant account providers will have some hidden fees in their merchant agreement or some extra costs that are different from those told to you. Sometimes, processors have fluctuating rates that are based on factors outside of your control. Therefore, make sure that the merchant agreement is what you discussed in the beginning before you begin.

You will need to pay account fees as well as processing fee. The best way to make sure that you pay the least amount of money as processing costs is to negotiate lower fees. For businesses with low sales volume, it is recommended to negotiate a lower account fee and a higher processing rate. Businesses with high sales volume should negotiate for a higher account fee and a lower processing rate to save the most amount of money.

Try to Get Short-Term Contract

It is recommended to sign up a short-term contract. Many high-risk providers try to get merchants to sign up for a multi-year contract without any scope for the renegotiation after a few months. It is important that you try to find a merchant account provider that offers a month-to-month contract or a short-term contract. The standard in the industry is a three-year contract with early termination fees and you will have to pay the fees even if your business goes under. So, carefully read the merchant agreement before you agree to open the account.


Overall, opening a high-risk merchant account is like opening up normal merchant account but you need to do some more research and make sure that all your documentation is in order before you apply for the merchant account. It is also recommended to get in touch with a knowledgeable agent operating in the payment processing industry. These agents are aware of hundreds of payment processors in the industry and can help you navigate this industry in order to get the best possible high risk merchant account for your business.