The Difference between a Merchant Account and a High-Risk Merchant Account

Payment processing is an integral part of running your business, and you’ll need a merchant account to have the capability to process credit and debit card payments, whether online or in a physical store.

If you’ve tried applying for a merchant account, you probably know that businesses can be classified as regular merchants or high-risk merchants. But what exactly are the differences between the two?

  • A regular merchant account is given to a business that operates normally and without any factors that would tag it as being high-risk. For instance, a restaurant is a regular merchant since it offers food to customers. However, if a business is in an industry that has high risks, it’s automatically given a high-risk merchant account.

For instance, a CBD company is tagged as high-risk since CBD isn’t approved in all states yet and there are risks to selling marijuana-related products.

  • A business becomes tagged as a high-risk merchant if it incurs high transaction volumes, belongs to high-risk industries, has reputational issues, and has very high levels of refunds and chargebacks. A chargeback happens when a customer demands for a full refund on their debit or credit card with or without returning the product.

If a business has too many chargebacks, it can incur very high chargeback fees and put its credibility on the line.


High Risk Merchant accounts are given to those businesses that are tagged as high-risk, making it hard for them to obtain a regular merchant account from traditional financial institutions. A lot of banks won’t take the risk of doing business with a high-risk merchant, so they need to find a merchant account provider that will offer that service.

  • If you’re given a high-risk merchant account, you can expect to pay higher processing fees on transactions and chargebacks. Regular merchants, on the other hand, are charged with standard fees mainly because they pose no risks for the merchant provider, their customers and their own business.


  • Some of the factors that can tag a business as a high-risk merchant include a high average monthly sales volume, transactions of over $20,000 monthly, a high chargeback ratio, a high-risk industry, and a new business. You can also be categorized as a high-risk merchant if you have a poor personal or business financial history.

A regular merchant, on the other hand, is a business that’s stable enough to operate smoothly, has little to no chargebacks, and doesn’t belong to any high-risk niches.


  • Regular merchants usually use card-present (CP) transactions, which means that the credit or debit card was used when the payment was processed. This usually results to lower chargeback fees as compared to high-risk merchants where payments are usually processed ithout any card present.


Whether you’re a regular merchant or a high-risk merchant, it’s very important to find the right merchant provider to help you navigate your way through processing payments and making sure that you’re protecting your business and your customers. You can take control of your business today!