by Ben Dwyer At the best of times, it can be difficult to give an accurate answer regarding a good “rate” for credit card processing, because costs are highly business-specific. This is even more true of “high risk” businesses – those in industries like adult entertainment, gambling, vape shops, travel, and tech support.
However, it’s still possible to get a general idea of average costs for various industries and business types. At CardFellow, we work with processors that serve high risk businesses and have pulled together some rough numbers to give you an idea of whether you’re overpaying.
Rates for High Risk Merchant Accounts
Keeping in mind that the actual rates and fees you’ll pay depend on a number of factors, high risk businesses should expect credit card processing fees to start around 3.5% for an established business in a “less risky” high risk category.
From there, costs can rise to 10% or more, with the highest rates coming for those in the riskiest industries or businesses using “offshore” merchant service providers.
What High Risk Processors Say
High risk processor PaymentCloud says that their “average” rate for a high risk merchant account is 3.95%. That rate is for transactions that the company deems “qualified.” Transactions considered “mid-qualified” or “non-qualified” will cost an average of 100 basis points (1%) more.
However, it’s important to remember that processors consider many variables when setting rates and fees. For high risk businesses, industry is a big one. Within the category of “high risk,” there’s still a range, meaning some businesses are a lower risk than others. PaymentCloud points out 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 processor eMerchantBroker says that businesses with high average tickets and industries with a reputation for excessive chargebacks should expect rates starting at 3% + 15 cents per transaction in addition to monthly fees, PCI compliance fees, and more. Again, businesses in “riskier” industries should expect higher costs.
Host Merchant Services also stresses that it’s tough 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. On the “lower” end, you may see rates starting around 2.89% for industries like bail bonds, while nutraceuticals will fall around 3.75% + 25 cents to start, and other products like teeth whitening may go up to 6% or 7%. If you’re eligible for an interchange plus quote (which some of the “lower risk” high risk industries may be) you can expect to see rates starting around 75 basis points over interchange.
You don’t have to settle for guesstimates and averages. See real quotes from multiple high risk processors using CardFellow’s free processing rate comparison tools. It’s fast, private, and no obligation. Find out what your high risk business will pay to accept cards!
When is a rate “too high?”
If you’re experiencing “sticker shock” over high risk processing rates, you’re probably wondering if your rate is the best you can do. 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 business.
However, for a rough rule of thumb, you should expect 3.95% – 4.95% for qualified rates. If you’re your processor’s rates are a lot higher, it would be worth your time to look into other options. While 10% or more is not uncommon for ultra-high-risk offshore merchant accounts, PaymentCloud cautions that such rates aren’t the norm for domestic merchant services: “In general, if you are seeing rates [of 10% or more] on a domestic account, something is very wrong.”
That said, in some cases, a business can be extremely high risk. 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 wiggle 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, work to keep your chargebacks low, and then shop again after several months.
How to Get a High Risk Merchant Account
The fastest and easiest way to get a high risk merchant account with competitive rates is to sign up for quotes through CardFellow. Our marketplace enables you to get real quotes from multiple processors that support high risk industries without handing over your contact info. It’s free to use and you’ll get quotes instantly upon completion of a short business profile. Best of all, you get ongoing assistance from CardFellow, including help choosing the right solution, free statement monitoring to ensure you don’t overpay, and more.
It’s very difficult to accurately compare high risk rates yourself, due to the prevalence of tiered pricing for high risk businesses. With tiered pricing, your processor will determine which of your transactions will be charged according to “qualified,” “mid-qualified,” and “non-qualified” rates. It doesn’t do you any good to secure a processor with the lowest “qualified” rate if that processor doesn’t consider any of your transactions to be “qualified.”
In order to accurately assess the competitiveness of tiered price quotes, you’ll need to start with the same qualification assumptions. CardFellow’s software handles that for you, ensuring a more apples to apples comparison.
