High Risk Fee

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High Risk Fee

All merchant accounts charge fees. At the bare minimum, you will be charged a fee for every transaction you make, which is usually a percentage of the transaction amount.

High risk businesses are typically charged additional fees. This is necessary to cover the added risk of processing their payments.

What’s High Risk?

There is a list of businesses that automatically get designated high risk by financial institutions. This includes many businesses with some stigma attached to them, including casinos, strip clubs, CBD or marijuana dispensaries, etc.

However, it is not difficult to be labeled high risk and many businesses fall into this category that you may not expect. Any business that offers card-not-present payments is at high risk. This includes any business that sells products online.

All high risk businesses, regardless of the product being sold, may have to seek out a high risk merchant account to process their payments. Some of these merchant accounts may charge additional fees for their service.

High Risk Fees

In addition to the typical transaction fees, some of the fees you may encounter when working with a high risk merchant account include:

Application and/or Setup Fees

Some merchant accounts charge a fee just to apply. This is to cover their investment in reviewing the application.

In addition to an application fee, many merchant accounts charge a one-time setup fee that covers setup, onboarding, and training.

Capture Fees

Some contracts limit the number of transactions they can process in a month. If a business exceeds the specified transaction volume they have to pay an additional fee.

Capture fees should be avoided for businesses with high transaction volumes.

PCI Compliance Fee

Merchant accounts that meet the standards of the Payment Card Industry are considered to be PCI Compliant.

This is something you should always look for when considering a merchant account.

Some merchant accounts charge a PCI compliance fee to cover their investment in the enhanced security standards being PCI compliant entails.

Penalty Fees

A chargeback happens when a customer disputes an item on their credit card bill. The business must then refund the amount in dispute.

Certain industries are more prone to chargebacks than others. Selling items online puts a business at greater risk of chargebacks. Too many chargebacks can also indicate poor business practices.

Some merchant accounts will charge additional fees for processing chargebacks.

Early Termination Fee

Another penalty fee you may encounter is an early termination fee. This is a fee for businesses that wish to cancel their account before the determined time specified in the contract.

Early termination fees are not standard and should be avoided.

Avoid Too Many Fees

Some fees such as transaction fees and compliance fees are unavoidable. However, some fees are not necessarily included in every contract. Examine your contract carefully and choose a merchant account provider with reasonable fees.

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