The rates and fees you pay are determined by a number of factors and high risk businesses can expect credit card processing fees to start around 3.5% for an established business in a “less risky” high risk category. Costs can rise to 10% or more with the highest rates coming from the most risky industries or businesses that use offshore merchant service providers.
The “average” rate for a high risk merchant account is 3.95%, with a good processor. That rate is for transactions that the company believes qualified. The transactions that are considered mid-qualified or non-qualified will cost an average of 100 basis points (1%) more. It is important to remember that processors consider many factors when they are setting rates and fees. Even with the label of high risk there are still categories as some business may be a lower high risk than others.
Some processors say that they’re able to set pricing for vape and e-cigarette businesses on the lower end of high risk rates if the business can show existing processing statements and documentation of established business. High risk processors feel that businesses with high average tickets and industries with a reputation for excessive chargebacks should be prepared for rates starting at 3% + 15 cents per transaction in addition to monthly fees, PCI compliance fees, and more. Again, businesses in “riskier” industries should brace themselves for even higher costs.
It may be difficult to give general numbers because so many factors affect pricing (including industry, processing history, and more) but that there are some rough rules of thumb.
You don’t have to settle for guesstimates and averages as many processors offer real quotes on their sites, free and with no obligation.
How can you tell if a rate is too high?
If you’re paying over high risk processing rates, you’re probably wondering if your rate is the best you could have received. The easiest way is to check your current pricing against the high risk quotes through the CardFellow marketplace. The competitive quotes placed through the CardFellow system provide a better baseline of the lowest possible pricing for your specific industry so you can easily compare processors.
However, in some cases, a business can be extremely high risk and if you’ve been turned down by several high risk processors and finally find one that will provide you with a merchant account, you’ll have less room to negotiate and may have to pay their fees. If that’s the case, it can be beneficial to build up a solid processing history, a strong relationship with your processor and work to keep your chargebacks low. After a while you may decide to shop around again.
How to Get a High Risk Merchant Account
The quickest and easiest way to obtain a high risk merchant account with reasonable rates is to sign up for quotes. You can find a website that compares quotes from multiple processors that support high risk industries without handing over your contact info.
It’s very difficult to correctly compare high risk rates for yourself, due to the prevalence of tiered pricing for high risk businesses. With tiered pricing, your processor will decide which of your transactions will be charged according to “qualified,” “mid-qualified,” and “non-qualified” rates.
