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Navigating the High-Risk Merchant Account Application Process

Woman filling out an application form

“Is my business high-risk? What does that even mean? Do I need a high-risk merchant account? Where do I start with that? How long will it take? Does it come with different application fees?”

Since you’re here, you’re probably asking yourself those questions and more. While it’s a headache trying to figure all of this out on your own, the most confusing part of this for many merchants in high-risk industries seems to be the application process itself.

That’s why our team of payment experts has compiled this quick, simple guide to explain the whole process.

We’ll take you step by step through the high-risk account application process, from figuring out your risk level to obtaining a dedicated merchant account and processing your first transaction.

First: Do You Need a High-Risk Merchant Account?

Typically, what makes a business high-risk are, well, the potential risks involved. Here, we’re talking about the risks from operating within a trade, categorized as risky, including higher chargeback ratios, sales volumes, valued goods, or unpredictability in demand.

The main trades that are considered high-risk mostly include the following:

  • Adult

  • Gambling

  • CBD/Cannabis

  • Crypto

  • Tobacco/Vape/E-cig

  • Travel

Being labeled as high-risk, however, doesn’t only affect how banks or other organizations classify your business—it means you’ll need a specialized merchant account and a different approach to transaction processing than a lower-risk business would. 

So, once you know your business is high-risk, you should be able to get a merchant account right away, right? That, sadly, isn’t as simple as it sounds either.

Many banks avoid working with businesses categorized as high-risk, mostly due to the financial risks associated with them, but also due to potential reputational risks that could hurt their business if they’re found to be associating with certain…”taboo” businesses.

💡 Before starting your high-risk account application, we suggest learning more about the inherent risks involved in your niche industry and what kinds of payment gateways and merchant accounts you might need to process transactions successfully.

To help you get started, here’s a breakdown of some of the high-risk industries we work with:

👉🏼 Adult Merchant Accounts

👉🏼 Gambling Merchant Account

👉🏼 Cannabis Merchant Account

👉🏼 CBD Merchant Account

👉🏼 Travel Merchant Account

👉🏼 Vape & E-Cig Merchant Account

The High-Risk Merchant Account Application Process

While the application process for a high-risk merchant account varies greatly from one business to another, there are a few key pointers we at FastoPayments give to any merchant we work with. 

1. Research Potential Payment Processors

Nowadays, there are many service providers on the market claiming to be the best. While there are definitely some excellent, trustworthy, and reputable providers, there are just as many low-quality providers, if not more. 

So, it’s difficult to make sense of this mess, especially for a high-risk merchant.

When looking for the perfect merchant account provider for your high-risk business, it’s important to do your due diligence on the provider’s reputation.

Just Googling the processor won’t do much for you here. That’s why we’d suggest you look up actual customer stories to make sure they’re the seasoned pros they’ve claimed to be (experience cannot be stressed enough here). 

Additionally, if anything is unclear, just contact the processor and bring it up. That’s the only way you can get an actual understanding of what they offer and what they could do for your business specifically. 

2. Gather the Required Documentation

This may be the most tedious yet important part of the whole process. However, gathering the required documents prior to submitting your application can expedite the entire procedure and ultimately lead to faster approval.

The key part here? Be as specific, accurate, and detailed as possible. 

Make sure you have all the documents ready, preferably in English as most acquirers don’t accept legal documents in any other language. Also, ensure your business is in compliance with the standard laws and requirements of your preferred processors.

Our requirements page is a great place to start here. The documents needed, no matter the industry you’re in, typically include:

  • Certificate of incorporation

  • Articles of association

  • Copies of passports of all owners and authorized signers

  • Utility bill for all directors, owners, and authorized signers

  • Proof of domain

  • Last three months of company bank statements

  • Local representative

  • Customer service number

  • Website policies

  • SSL secured payment page

  • Company name and address

  • Customer service email address

  • Login credentials

  • Supplier agreements or invoices

  • Copy of operating license (Crypto, Gambling, Forex)

  • Rental agreement or rent invoice

  • Lab tests (CBD)

  • Processing statements

  • Business plan and cash flow forecast (start-up)

  • Sole proprietors 

  • PCI self assessment questionnaire

  • PCI scans done on the website from a PCI approved distributor

It's almost impossible to get a complete list of requirements you'll need for a 'fast approval' because it depends on each acquirer. The list on our requirements page has worked for us for over four years, and it's a great starting point for any high-risk business.

Dennis Pedersen FastoPayments

3. Prepare Your Business Plan

A well-prepared business plan should be second to none for an aspiring high-risk merchant.

That’s because having a solid plan of action is the only way a start-up business owner can really showcase their commitment to their mission, their knowledge of the risks involved, and, ultimately, establish trust with a payment service provider

Some key elements to incorporate in yours include:

  • An executive summary

  • Market analysis

  • Sales strategies

  • Financial projections

These documents and numbers will help you build credibility while also demonstrating your financial stability and your strategic foresight, all of which are necessary for approval (and honestly, they’re all necessary if you plan to run a successful business anyway). 

4. Implement Risk Management Measures

Implementing robust risk management measures in the context of a high-risk account application means that every high-risk merchant should go the extra mile to ensure that they can manage the risks involved. 

To do that, it’s important to do things like :

  • Set the required age restrictions on your site
  • Provide clear refund policies
  • Use clear photos of your products along with detailed product descriptions

This way, you’re decreasing the risk of chargebacks at the very root by managing customer expectations. 

Additionally, using advanced fraud detection and prevention tools will earn you plus points from the acquirers as well. However, you shouldn’t worry about these too much, as any great payment processing partner should help you in this regard.

5. Optimize Your Website

Now, this is where it might get a little confusing, as the term “optimizing” is very broad in this sense.

What’s meant by that here, however, is that having clear guidelines, easily navigable payment dashboards, transparent terms, straightforward contact information, and simply maintaining a professional look on your site can drastically change (i.e., improve) how an acquirer views your application.

Overcomplicated websites with indistinct restrictions won’t only turn away customers but potential payment partners as well.

A laptop showing an online ecommerce store, a credit card and a trolley with some purchases and some coins in the air as a payment is being made

Next: What’s the High-Risk Merchant Account Approval Process?

So…what does the process look like as a whole? As in, from start to finish? We’ve listed the approval procedure step by step from our point of view below:

  1. The merchant signs up through our site and sends us their pre-application. Here, we get the initial information, including their website, contact information, processing volumes, country of incorporation, cash flow forecast, and business plan if needed. Typically, we set up a meeting with the merchant at this stage to get to know them better and to have a better understanding of what kind of approach we’d need to take. 

  2. After we’ve got a good overview of the business, we send the pre-application to a suitable acquirer for a pre-check to make sure that the merchant is within the acquirer’s risk-appetite.

  3. After the check comes back positive, we move forward with the full pricing for the merchant and ask them to fill out our full-application. Here’s where the nitty-gritty documentation comes into play.

  4. This stage may take a while unless the merchant already has all the minute information, including legal documents, test-users, IDs of owners, etc. We’re always happy to assist to help the process move along a little faster here.

  5. After we’ve given the full-application our last look and ensured every area is covered, we can fully submit the merchant to the acquirer.

  6. The waiting game.

  7. Usually, the acquirer comes back to us after a few days of submitting the application with the initial feedback, which we forward to the merchant.

  8. Now we have to do a bit of back-and-forth emailing to make sure everything is up to the general standards, acquirer’s requirements, and in compliance with the regulatory terms.

  9. After getting the green light, the acquirer will send out the contract and integration instructions. At this step, it’s always good to have a developer on stand-by. No need to worry if you don’t though, we are here to assist from our side with the gateway, integration, and any further questions as well.

  10. Start processing!

For high-risk businesses, you should expect the process to take a minimum of about 15 days as long as you have a complete application without any issues. In general, it takes around 30 days, though, for most standard high-risk businesses.

Dennis Pedersen FastoPayments

FastoPayments’s Expert Tips for Faster Approval

We asked our Chief Officer of Partnerships and Sales, Annabel, what she would recommend to any merchant looking to start the high-risk account application process for the first time. Her response?

“The main tip I would give any merchant looking for a quick approval is to be responsive! The faster you are to reply to questions and requests from the acquirers, the quicker they can do the necessary checks and have you approved.”

To illustrate, we had a merchant who replied to all of our emails within hours and always returned our emails with detailed answers and receipts for everything needed. They were able to move from the very first stage to integration within 10 days.

Compare this with another merchant we were working with who took weeks to reply to each request, had many problems obtaining the required documentation to prove they were in compliance with the regulations, and was generally just not very cooperative. Due to their unresponsiveness, it took over six months to finally approve them for a merchant account.

While these two cases are both very extreme examples, this only proves how big of a role the merchants themselves play in the duration of the whole process.

Get High-Risk Merchant Services with FastoPayments

At the end of the day, if you’re not sure where to start, ask for help. Having an expert by your side in any high-risk industry can take the weight off your shoulders and help get you through this process a whole lot faster.

We're building a system based on our experience that allows you to input certain things for certain industries. These are the kinds of features you have access to when you partner with a company like FastoPayments. We're constantly working to improve our payments dashboard and related services for our customers in ways that allow them to operate more efficiently and scale with ease.

Dennis Pedersen FastoPayments

Interested in a hassle-free, high-quality, high-risk merchant account? We’ll walk you through the process. Get a free, no-obligation quote for a high-risk merchant account here. We’ll review your business information and get back to you ASAP.

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