High Risk Merchant Account Guide in 2026
Need a high-risk merchant account? Durango Merchant Services walks you through the paperwork, talks directly with underwriters, and consult on cutting edge fraud and chargeback prevention tools so you sail through review. Follow our guide and you’ll increase the likelihood that your business will be accepting credit card payments, and beating chargebacks in three days on average.
What is a High Risk Merchant Account?
A high-risk merchant account is a specialized payment-processing arrangement for businesses that card networks or banks see as carrying above-average chargeback, fraud, or regulatory exposure—think supplements, travel, sports betting, or subscription products/services with recurring billing. Instead of forcing you onto “one-size-fits-all” platforms that freeze funds at the first dispute, a high-risk account is individually underwritten, comes with tougher fraud filters, and often includes rolling reserves to cushion chargebacks.
The upside: you get stable, scalable processing tailored to your niche, rather than hoping mainstream providers don’t shut you down overnight.
The Business & Tech Experts Know Us
Over our 20+ years providing high risk merchant accounts, we have earned accolades and recognition for outstanding service.
How High Risk Credit Card Processing Works (and Why It’s More Stable)
High risk credit card processing follows the same mechanics as any other payment flow—authorization, capture, settlement—but the difference is in the foundation. Instead of treating your business like a generic retail account and reacting later when something looks “unusual,” high-risk processing is designed to understand your business model upfront and build the account around it. That’s why it’s often the better option for industries with higher dispute exposure, subscription billing, future delivery, international sales, or larger ticket sizes—because the goal isn’t just to get you live, it’s to keep you live as you grow.
- Underwriting happens up front so your business model is approved intentionally, not “tolerated until flagged for suspension of closure.”
- Your risk profile is evaluated based on what truly matters: billing model, delivery timelines, marketing practices, customer support workflows, and dispute history.
- Risk terms (like reserves) are disclosed and structured predictably, not introduced unexpectedly after you scale.
- The processing stack is configured to reduce problems—fraud filters, velocity controls, dispute workflows, and gateway settings aligned to your model.
High Risk Merchant Account Instant Approval: What’s Real (and What’s Risky)
When merchants are looking for high risk merchant accounts with instant approval, what they usually want is simple: get processing turned on fast. The important thing to know is that in high-risk payments, “instant approval” doesn’t means no underwriting. Legitimate acquiring banks still require a real risk review to prevent future funding holds, shutdowns, and compliance issues.
In most cases, “instant approval” is one of three things:
- A fast preliminary approval (often within 1 day) when documentation is complete and error free, processing history is without hiccups and the business model is clear.
- An expedited underwriting process matched to the right acquiring bank for your industry/category
- A PayFac-style signup (Stripe/Square-type platforms) that can be fast to start but carries higher risk of sudden freezes or terminations for high-risk merchants
Website & Checkout Processing Approval Checklist
Underwriting delays often come down to avoidable website gaps. Before you apply for a high risk merchant account, make sure your site includes:
- Business name, phone, email, and physical/registered address
- Refund / return / cancellation policies that are easy to find
- Shipping or fulfillment policy with realistic timelines
- Terms of service and privacy policy
- Clear billing terms (especially for subscriptions/continuity)
- Clear product/service descriptions (no vague promises)
- A visible customer support path (contact form, chat, email, phone, ticketing)
If you want speed, this checklist is one of the fastest ways to get it.
Approval Timelines for a High Risk Merchant Account
While each case is unique, and depends on the quality of your underwriting docs, timeliness of delivery and processing history, realistic approval timelines look like this:
Same day to 24 hours: Preliminary underwriting decision (for fully compliant prepared applications in less risky industries)
1–3 business days: Full approval and account setup (most common)
3–5 business days: Complex, international, or higher-risk models
Contact us today for a free consultation to discuss your high risk business model, review eligibility, and explore approval options. We’ll help you work through the challenges of high risk payment processing — and build a solution that supports your growth.
Benefits of a High Risk Merchant Account (Why Businesses Switch)
High-risk merchants don’t come to DMS because they want a buzzword—they come because they want stability. A well-structured high risk merchant account provides a path to consistent processing even when your business has characteristics that make mainstream processors nervous.
With DMS, the most meaningful outcomes are:
- Approval aligned to your business model (subscriptions, future delivery, international, high-ticket)
- Reduced shutdown risk because the account is structured correctly up front
- Predictable funding expectations (reserves and settlement explained in advance)
- Customizable risk controls that protect your approval as you grow
- A dedicated account manager who guides underwriting and stays involved
High Risk Merchant Account vs PayFac vs Traditional Processor
Many high-risk merchants start with a PayFac-style platform because onboarding is easy. The problem is that “easy to start” can quickly becomes “hard to keep,” especially in higher-exposure categories. PayFac models can be more sensitive to automated risk triggers like sudden volume spikes, dispute patterns, and certain product/service types.
Here’s the difference in practical terms:
| What You Need | PayFac-Style Platform | Traditional “Low-Risk” Processor | High Risk Merchant Account |
|---|---|---|---|
| Processing built for high-risk industries | Often no | Often declines | Yes |
| Funding stability under review | Unpredictable | Varies | Structured + predictable |
| Underwriting aligned to your model | Limited | Limited | Built for your risk profile |
| Scaling tolerance | Frequently triggers reviews | Varies | Designed to scale |
| Best fit | Simple, low-risk models | Standard retail | High-risk + complex models |
When your revenue depends on processing uptime, the goal isn’t to “get in fast.” It’s to get in with security.
What Are The Disadvantages of High Risk Merchant Accounts?
High-risk merchant accounts keep the payment lights on for tricky industries, but they aren’t free passes—banks hedge their exposure by building in a few trade-offs. Before you sign, know the downsides you’ll need to budget for and actively manage.
Higher Processing Costs
Expect discount rates in the 1.9 – 5 % range and per-item fees above the standard 10–15 ¢. Those extra basis points compensate the bank for elevated risk.Rolling Reserve Requirements
Most high-risk agreements hold back 5 – 10 % of daily sales for 90–180 days. While you eventually get the money, it can pinch cash flow—especially for fast-growth companies.Longer Settlement Times are Possible
While not always the case, instead of next-day funding that some traditional accounts provide, you may wait two or three business days so the processor can screen for fraud patterns before releasing cash.More Up-Front Paperwork
Underwriters want detailed financials, marketing materials, fulfillment proofs, and ID for all beneficial owners. That initial approval cycle can take a week or two versus instant sign-up with a pay-fac.Ongoing Monitoring and Penalties
Go over 0.9 % chargebacks for Visa or 1 % for Mastercard and you’ll face fines or be pushed into costly network monitoring programs. Staying in compliance requires active dispute management.
What Makes A Business High Risk?
High chargeback or refund rates
When your dispute ratio hovers near or above 0.9 %, banks see every transaction as a potential fine from Visa or Mastercard. They respond with higher fees, rolling reserves, or outright declines because each chargeback costs them both money and reputation — not just you.Regulated or age-restricted products
Selling CBD, nicotine, alcohol, adult content, or firearms accessories brings constant legal scrutiny. Laws shift by state and country, so acquirers must track compliance in real time. That extra oversight makes you more expensive to underwrite and more likely to be labeled “high risk.”Subscription or negative-option billing
Free trials and continuity boxes drive recurring revenue, but they also drive forgetful customers to their banks for refunds. Card brands now mandate transparent cancellation paths; if you slip up, disputes spike and your processor’s risk teams flag the entire business model.Future-delivery or high-ticket items
Travel packages, concert tickets, custom furniture, and coaching programs charge months before the customer receives anything. If plans change or shipping runs late, the bank takes the heat for refunding cardholders, so they pre-emptively classify you as risky.Digital or intangible goods
E-books, software licenses, and gaming credits can be delivered instantly—and reversed just as fast. Because delivery proofs are easy to fake and stolen cards resell well on the dark web, issuers assume higher fraud odds and demand tighter controls.Unstable or rapidly scaling volume
Sudden jumps from $10K to $200K a month look like laundering or card-testing attacks in the eyes of automated risk engines. Until you can document why growth is legitimate, processors hedge with reserve hikes or high-risk pricing.Cross-border or multi-currency sales
Serving multiple countries introduces foreign-exchange risk, higher fraud rates, and stricter KYC rules. Each added currency or region multiplies complexity, so acquirers cushion themselves by tagging you high-risk and adding settlement delays.Poor credit history or prior MATCH listing
If the principal owners show late payments, bankruptcies, or a Terminated Merchant File (MATCH) record, underwriters assume past problems could repeat. They’ll either demand a personal guaranty with steep reserves or route you straight to a high-risk bank.Industries on card-brand watch lists
Nutra, debt relief, crypto exchanges, fantasy sports, and similar verticals appear in Visa’s Integrity Risk Program and Mastercard’s BRAM manual. Banks don’t debate the label—they follow the rules, add extra monitoring, and classify the entire sector as high risk.
Red Flags That Trigger Holds, Declines, or Shutdowns for Businesses Payment Processing
These issues frequently create underwriting friction or post-approval reviews:
- Missing or hidden policies
- Overpromising marketing language
- Unclear fulfillment timelines
- Trial period transitions to recurring billing without clear disclosure
- Sudden volume spikes without a rationale
- Dispute surges without a mitigation plan
If any of these apply, DMS can usually help you fix them quickly before underwriting begins.
What You Need To Open A High Risk Merchant Account
Universal Requirements:
Written chargeback-mitigation plan
List the tools you’ll use (3-D Secure 2, Ethoca/Verifi alerts, device fingerprinting).
Outline your internal workflow for handling retrievals, disputes, and friendly-fraud cases.
Proof of financial stability
Recent bank statements and, if available, tax returns or P&L.
Brief cash-flow summary showing you can absorb rolling reserves and unexpected chargebacks.
Willingness to accept reserve and higher rates
While they can be avoided with a great background, many merchants can expect a 5–10 % rolling reserve and a discount rate above low-risk pricing.
Acknowledge these terms up front to signal you understand the risk model.
Fast response to underwriting questions
Aim to supply additional documents or clarifications within 24 hours.
Prompt communication can shave days off approval time.
Work with a high-risk specialist
An experienced provider such as Durango Merchant Services routes your file to banks already comfortable with your vertical, avoiding the mainstream “no” loop.
Existing Business Requirements for High Risk Payment Processing Approval:
Showcase clean processing history
Provide at least three recent monthly statements. Highlight a dispute rate below 1 percent, rising sales volume, and any successful fraud alerts you’ve used. Underwriters love a proven track record.Supply comprehensive documentation
Bundle your articles of incorporation, EIN letter, driver’s licenses of 25 %+ owners, three to six months of bank statements, and a voided business check. A complete file speeds approvals.Demonstrate chargeback mitigation in action
Present evidence of active tools—3-D Secure 2, Ethoca/Verifi alerts, device fingerprinting—and describe how your team handles “friendly fraud.” Show that disputes are identified and addressed before they become chargebacks.Explain recent spikes or anomalies
If you’ve had a sudden volume jump or a blip in chargebacks, attach a short explanation (marketing campaign, seasonal sale, supply-chain delay). Context keeps the file from landing in the reject pile.
New Business Requirements for Merchant Services Approval:
Prepare a realistic revenue forecast
Include a 12-month sales projection, average ticket size, and expected refund rate. Underwriters need to see you’ve thought through cash flow and risk.Provide proof of launch capital
Attach bank statements, investor term sheets, or crowdfunding receipts proving you can cover early chargebacks and reserve holds.Launch with a compliant website
Before you apply, make sure your site displays full pricing, currency, refund policy, privacy policy, and real contact details above the Pay button. Starting compliant beats scrambling to fix errors during underwriting.Outline your fraud-prevention stack
Even without transaction history, show you plan to install 3-D Secure, AVS filters, and chargeback alerts on day one. Proactive risk controls calm jittery banks.
Payment Processing Fees, Reserves, and Settlement Timing
High-risk terms vary by industry and profile, but every merchant should understand the categories of costs and how they affect cash flow.
| Cost Component | What It Is | Why It Matters |
|---|---|---|
| Discount rate | % of each transaction | Reflects risk + interchange + acquiring costs |
| Per-transaction fee | Flat fee per transaction | Processing/network costs |
| Monthly fee | Account and platform costs | Support, reporting, risk ops |
| Chargeback fees | Fee per dispute | Dispute handling/network costs |
| Rolling reserve | % held temporarily | Buffer for refunds/disputes |
Reserves are often the biggest concern. In practice, reserves are usually predictable, often temporary, and frequently improve as you demonstrate stable fulfillment and low dispute rates. A good provider sets these expectations early and helps you earn better terms over time.
How to Open a High Risk Merchant Account?
By their very nature, high risk merchant accounts are not one size fits all contracts. There are a lot of factors that lead businesses to require one and the specifics of you situation determine the path to secure high risk credit card processing. Durango Merchant Services experts will help to guide you through the requirements and options with the primary goal of providing options for approval. We have created this high level how-to-guide to help you understand the process and requirements of the application process.
Required Documents
Things Needed?
How to get started with a high risk merchant account
Practical Strategies For Making The Most Of A High-Risk Merchant Account
Layered fraud prevention
Deploy a multi-front defense that starts at checkout and follows the transaction through settlement. Pair 3-D Secure 2 authentication with CVV and AVS checks to verify cardholder identity, then add device fingerprinting to flag mismatched IP addresses or cloned browsers. Velocity limits stop rapid-fire attempts from bots, while IP geo-blocking rejects transactions from regions where you don’t actually sell. Together, these tools reduce both “friendly fraud” (customers disputing legitimate purchases) and true stolen-card activity, keeping your combined fraud-and-chargeback ratio safely below Visa’s 0.9 percent and Mastercard’s 1 percent thresholds.Chargeback early-warning system
Integrate Ethoca and Verifi alert feeds into your CRM so you learn about a disgruntled cardholder within hours rather than after the dispute is filed. Configure an auto-refund or outreach workflow—an immediate credit, a shipment-status email, a customer-service call—that resolves the complaint before it matures into a chargeback. Each alert you defuse not only saves a $15–$25 dispute fee but also protects your rolling dispute ratio from creeping toward network penalty programs.Clear, friction-free policies
Cardholders cite “merchant didn’t disclose terms” more than you’d think. Post your refund, shipping, and cancellation language directly above the Pay button in plain language and require an easy-to-read checkbox confirmation. Follow the sale with an email receipt that repeats price, descriptor, next-billing date, and a one-click cancel link. The clearer the consumer journey, the fewer “I never saw that” disputes you’ll face—and the more confidence underwriters have in approving higher monthly volume caps.Dedicated customer-support channel
Offer live chat and a phone number that rings through to a human in under 30 seconds. Equip agents with a refund-authorization threshold so small issues are handled on the spot. Most cardholders choose a quick refund or replacement over calling their bank, and issuing a good-will credit costs far less than a chargeback fee, lost product, and network fine.Weekly KPI monitoring
Set a Friday ritual: export chargeback counts, early-warning alerts, refund totals, fraud-screen rejects, and rolling-reserve balance. Plot the trends so you can spot a rising dispute line before it crosses 0.65 percent—your “yellow light” level. Early detection lets you tighten fraud screens or update policies before card-brand monitors issue fines or place you in VAMP/BRAM programs.Multiple MIDs & load balancing
Don’t let all revenue hinge on a single MID. Use gateway routing rules to distribute transactions by card type, currency, or ticket amount across two or more acquirers. If fraud spikes on one stream and the processor pauses it for review, you still capture sales on the others. Load balancing also evens out ratios so no single account bears the full brunt of seasonal chargebacks.Strong settlement planning
High-risk processors often hold funds a day or two longer and keep a rolling reserve. Maintain at least 30 days of operating cash in a separate account to cover payroll, advertising, and supplier costs without dipping into personal funds. Align your payout calendar with fixed expenses—e.g., set payroll for Fridays after Wednesday deposits clear—so reserve holds never derail daily operations.Quarterly compliance reviews
Treat compliance as a recurring project, not a one-time hurdle. Every quarter, confirm your site still meets PCI-DSS scope, that product offerings match what you disclosed in underwriting, and that your statement descriptor and MCC align with Visa/Mastercard rules. Submit any new marketing funnels, upsells, or international URLs to your acquirer before launch to avoid surprise account reviews.Reserve-reduction roadmap
Your reserve isn’t permanent. After 90 days of clean processing—dispute ratio under 0.65 percent, fraud alerts resolved, no monitoring program entries—compile the data into a short report. Request a meeting with your account manager and propose lowering the reserve from 10 percent to 5 percent or shortening the hold period. Acquirers respond well to merchants who show proactive risk management backed by hard numbers.Document everything
Store delivery confirmations, tracking numbers, signed contracts, refund receipts, customer-service transcripts, and alert outcomes for at least 18 months. When a dispute arises, you’ll have the evidence bundle ready to upload within the response window, boosting your win rate and reinforcing your reputation as a well-managed account when auditors or underwriters review your file.
Some Industries That Commonly Require A High Risk Merchant Account?
Insurance Providers
Range of prices for high risk merchant accounts:
- Discount rates that range between 1.95% and 4.95%
- Authorization fees ranging from: $ 0.15 to $0.25
- Monthly installments: rates ranging from $15.00 per month to $60.00 per month
Typical Terms in a Credit Card Processing contract:
- Free Application Processing
- Rolling reserve requirements that range from: 0% to 10%
- Variable contract lengths including availability of month to month
- Direct financing with regular deposits
- Minimum processing: $5,000 minimum for US accounts, $50,000 for international accounts
10+ YEARS MORE PROCESSING EXPERIENCE THAN OUR LEADING COMPETITORS
- A deep understanding of your payment needs
- Expertise in technology and integrations
- The Largest Network of Payment Methods
- A reputation that has stood the test of time
Frequently Asked Questions
What is a High Risk Merchant Account?
A special type of bank account that you open with a payment card processor. This account first clears transactions from your customers’ card issuing banks, and then settles the funds into your business checking account. Whether you have a brick-and-mortar shop with point-of-sale terminals, mobile terminals for accepting transactions on the road, an e-commerce store on your website, or any combination of these, the transactions are all processed by your merchant account provider.
Why Do I Need a High Risk Merchant Account?
You may have heard of aggregate payment providers like, STRIPE, PAYPAL, and other similar services. These don’t require you to apply for your own account. Essentially, these companies aggregate the credit transactions of hundreds of individual, unrelated businesses and process them all through their own merchant account.
As you can see, aggregate payment providers can be convenient. However, if any irregularities arise, these providers often just cut their losses and terminate your account. This is because they would rather be rid of your business than try to work with you to figure out what’s going on.
Applying for your own direct merchant account ensures that you will not experience unexpected processing interruptions due to a lack of proper underwriting.
How Does Credit Card Processing Work?
- Your customer enters their card information on your website.
- Data travels through your payment gateway – a secure and direct connection to the payment processor. The cardholder’s information is used to determine if he or she has the available funds to cover the transaction.
- The payment processor transmits information to the customer’s bank or credit card company. This network of communication arranges for the funds to be deducted from the customer’s balance and deposited into your checking account.
- If something goes wrong at any point in this process (for instance, if the customer later disputes the card transaction), the payment processor is ultimately accountable for the funds involved. ** THIS is why proper underwriting is required UPFRONT before you start processing payments, instead of AFTER the payment processor is holding your money.
What Does High Risk Mean?
Payment processors take on a certain amount of risk with every transaction they process. For this reason, processors want to protect themselves as much as possible in order to minimize their losses to bad transactions. As part of this effort to insulate themselves from risk, they classify certain businesses as “high risk.” A high risk business is more likely to have a higher number of chargebacks, fraudulent transactions, or other problems. These problems create a huge financial liability to the processing company.
Here are a few of the traits that can get a business labeled as high risk:
- An individual’s financial history
- The business’s financial history
- The type of industry a business is in
- The reputation of a similar business
- The products or services a business offers
Call to talk to one of our account managers today!