The World of High-Risk Merchant Accounts
Businesses come in many forms, each with its own unique set of challenges and opportunities. Some, however, are deemed “high-risk” by banks and payment processors due to the nature of their industry or transaction patterns. While this label might seem intimidating, understanding the complexities of high-risk classifications can help you unlock valuable opportunities and establish more secure and efficient payment solutions for your business. So, what exactly is a high-risk merchant account, and why would your business need one? Let’s take a look through this intriguing financial world, covering everything from what makes a business high-risk, to selecting the best high-risk payment providers in the UK.
In this article, we’ll guide you through the top high-risk card payment providers in the UK for 2024, highlighting their strengths, industry specialisations, and the benefits they bring to your business. We’ll also explore the types of businesses considered high-risk and answer some frequently asked questions to help you make an informed decision.
What Makes a Business High-Risk?
A business can be classified as high-risk for several reasons:
- Industry Type: Businesses in sectors with high chargeback rates or regulatory challenges, such as gambling or adult entertainment, are often labelled as high-risk.
- Financial History: If a company has a history of chargebacks, financial instability, or poor credit, it may be deemed high-risk.
- Transaction Patterns: Large transactions, international sales, or unusual sales patterns can contribute to a high-risk classification.
Understanding the reasons why your business might be considered high-risk can help you choose the right payment provider and avoid potential pitfalls.
High-Risk vs. Low-Risk Merchant Accounts: Key Differences
High-risk and low-risk merchant accounts differ significantly in terms of acceptance criteria, fee structures, and contractual obligations. Understanding these differences is crucial for selecting the right payment solution for your business. Here are the key distinctions:
- Acceptance Criteria:
- High-Risk: Payment processors scrutinise factors such as industry type, history of chargebacks, and financial stability. Businesses in industries like gambling, travel, or adult entertainment are often classified as high-risk due to higher chargeback ratios or regulatory scrutiny.
- Low-Risk: Standard criteria are applied, focusing primarily on the business’s creditworthiness, stable financial history, and low chargeback rates.
- Fee Structure:
- High-Risk: Involves higher processing fees, monthly or annual account fees, and notably increased fees for chargebacks. High-risk accounts may also include reserve requirements to cover potential losses.
- Low-Risk: Typically, lower transaction fees, minimal monthly costs, and standard chargeback fees apply.
- Reserve Requirements:
- High-Risk: May include rolling reserves (a percentage of each transaction held to mitigate chargeback risks) or upfront reserves where funds are held until a certain threshold is met.
- Low-Risk: Reserve requirements are generally not imposed unless specific business circumstances necessitate them.
- Contract Terms:
- High-Risk: Often come with longer contractual commitments and penalties for early termination, reflecting the increased risk to the payment processor.
- Low-Risk: Typically have more flexible contract terms and shorter durations, with fewer restrictions on early termination.
- Approval Process:
- High-Risk: The underwriting and approval process is more stringent and time-consuming, requiring extensive documentation and detailed review of the business’s financial health and stability.
- Low-Risk: The approval process is usually straightforward and faster, with minimal documentation required.
- Security and Compliance:
- High-Risk: Demands enhanced security measures and strict adherence to compliance standards, particularly for industries prone to fraud or legal disputes.
- Low-Risk: While security is still a priority, compliance requirements are typically less demanding and easier to manage.
By understanding these key differences, you can better assess which type of merchant account aligns with your business’s specific needs and choose a provider that offers the most appropriate support and terms.
The Best High-Risk Payment Providers in the UK
Let’s dive into our top picks for high-risk payment providers, exploring their unique offerings, strengths, and the types of businesses they specialise in.
Total Processing
Based in Manchester, Total Processing is a top-rated high-risk payment processor known for its flexibility, customer-centric approach, and extensive integration options. They specialise in high-risk sectors like travel, technology, and gaming, providing robust solutions tailored to your business needs. Total Processing connects businesses to a global network of acquiring banks and supports 198+ payment methods.
Pros:
- Customised Pricing: Offers tailored pricing solutions, including interchange-plus and tiered models, based on your specific business requirements.
- Extensive Integration Options: Compatible with various programming languages and platforms like WordPress, Magento, and Shopify. This allows for quick setup and same-day integration.
- Comprehensive Security Features: Includes 3-D Secure, PCI DSS compliance, and Total Defender fraud shield to protect against fraud and chargebacks.
- High Approval Rates: Partnerships with multiple acquiring banks ensure higher approval rates and faster processing times.
- 24/7 Customer Support: A UK-based support team is available round the clock for assistance, ensuring issues are resolved promptly.
Specialist Industry Types:
- Travel: Offers secure payment solutions for businesses in the travel industry, which often face high chargeback rates due to cancellations.
- Tech: Supports tech-related businesses, providing solutions for subscription services and large transactions.
- Gaming and Gambling: Expertise in managing the unique regulatory and transactional challenges of the gaming and gambling sectors.
Total Processing is an excellent choice if you’re looking for a provider that understands your industry’s specific needs and offers bespoke solutions with robust security features.
Worldpay
Worldpay is one of the largest and most established payment processors globally. Known for its extensive experience and wide industry coverage, Worldpay has a solid reputation for handling high-risk sectors like gambling, adult entertainment, and financial services. They offer tailored risk management solutions to help businesses navigate complex regulatory landscapes.
Pros:
- Customised Risk Management Solutions: Offers risk management strategies designed specifically for high-risk industries, ensuring your business remains compliant and secure.
- Flexible Pricing Models: Choose from multiple pricing structures, including interchange-plus, monthly fees, and pay-as-you-go schemes.
- Robust Security Features: Includes advanced fraud protection tools that effectively minimise the risk of chargebacks.
- Multi-Currency Support: Accept payments in over 120 different currencies, making it ideal for international businesses.
- Quick Fund Transfers: Most bank transfers are processed within one business day.
- Scalability: Easily adapts to the needs of businesses of all sizes, whether you’re a small start-up or a large enterprise.
- Dedicated Support: Offers dedicated account management and round-the-clock customer support to resolve any issues promptly.
Specialist Industry Types:
- Gaming and Gambling: Extensive experience in managing the financial complexities and compliance issues of the gaming and gambling industries.
- Travel: Provides secure and efficient payment solutions for travel businesses, mitigating the risk of chargebacks and cancellations.
- Pharmaceuticals: Supports pharmaceutical businesses with robust compliance and transaction management systems.
- Alcohol: Offers solutions tailored for businesses selling alcohol products, handling both regulatory compliance and transaction security.
Worldpay’s vast experience, flexible pricing, and strong industry connections make it an excellent choice for high-risk businesses looking for a reliable and experienced payment processor.
Axcess Merchant Services
Established in 2007, Axcess Merchant Services focuses on offering tailored solutions for small and medium-sized businesses worldwide. With their comprehensive fraud and risk management services, Axcess is a go-to provider for businesses in high-risk sectors like adult entertainment, gaming, and technology.
Pros:
- Bespoke Risk Management Tools: Utilises advanced analytics and over 60 different risk settings, ensuring the safety and security of all transactions.
- PCI Level 1 Payment Gateways: Offers two PCI level 1 payment gateways, integrated with a copy-and-pay system for secure and seamless transactions.
- In-House Fraud Prevention: Provides in-house risk management services, offering comprehensive fraud protection and easy integration.
- Multi-Currency Support: Supports payments in 179 different currencies, making it ideal for businesses with international customers.
- Customised Solutions: Offers highly flexible and customisable payment solutions tailored to the unique needs of high-risk industries.
Specialist Industry Types:
- Adult Entertainment: Provides secure and discreet payment solutions tailored to the adult industry.
- Gaming: Offers solutions designed to handle high transaction volumes and complex compliance requirements.
- Tech/Fintech: Supports tech businesses with bespoke solutions for subscription models and high-value transactions.
Axcess Merchant Services is perfect for SMBs looking for a provider that offers tailored solutions, advanced security features, and excellent fraud prevention capabilities.
Fibonatix
Originally a consultancy, Fibonatix evolved into a payment services provider in 2013, offering customisable and comprehensive payment solutions for high-risk businesses worldwide. Known for their quick onboarding and settlement support, Fibonatix serves various high-risk sectors, including CBD, gaming, and cryptocurrency.
Pros:
- European and Middle Eastern Processing: Provides secure and reliable payment processing services across Europe and the Middle East.
- Variety of Payment Methods: Supports a wide range of payment methods, ensuring no loss of clientele due to payment method limitations.
- Settlement Support in Multiple Currencies: Offers settlement in a wide variety of currencies, minimising exchange rate risks.
- Customisable Solutions: Tailor-made payment solutions that align with the specific needs of each business.
- Fast Merchant Onboarding: Utilises a combination of automated systems and personal care to ensure a smooth and quick onboarding process.
Specialist Industry Types:
- CBD and Seeds: Expertise in navigating the legal complexities of the CBD industry.
- Vape: Provides secure payment processing for businesses selling vape products, which often face strict regulations.
- Gaming and Gambling: Manages the unique challenges of the gaming industry, including regulatory compliance and transaction management.
- Cryptocurrency: Supports businesses involved in cryptocurrency trading with tailored payment solutions and robust security measures.
Fibonatix is a strong choice for high-risk businesses looking for a provider that offers flexibility, fast onboarding, and extensive currency support.
Help Finding the Right High-Risk Payment Provider
Choosing the right high-risk payment provider can greatly impact your business’s stability and growth. Use resources like Merchant Advice Service's The Payments Directory® to find providers based on your specific high-risk needs, integrations required, and transaction methods. Remember to evaluate your options carefully and get multiple quotes before making a decision.
