If you’re looking to add more payment options for your European customers, you’ve probably come across a variety of payment services and products that could drive your business growth. While you want to start with a well-serviced merchant account, not every European merchant acquiring bank and merchant account service provider might be willing to accept you as a merchant due to the high risks inherent to the nature of your business.
Don’t fret, you’ve come to the right place – high-risk businesses have a bigger chance of getting a merchant account in Europe compared to non-European countries and our team is more than happy to support you in this journey.
For now, read on to learn about the reasons a merchant might be labelled as high-risk, which merchant account service providers are prepared to offer and maintain a high-risk merchant account and how to open one.
Merchant account service providers and merchant account acquiring banks regularly evaluate the level of risks pertaining to new and existing merchants. If your business currently falls within the category of high-risk or low-risk merchants, you should note that in the future the risk status can change if your business evolves (e.g. expands and starts accepting international payments).
If the risk increases, you can be required to take appropriate action (e.g. to set a reserve of funds or provide more information). Your merchant account might be closed if your provider doesn’t cater to high-risk merchants or if the risk associated with your business is too high.
What Is a High-Risk Merchant
A high-risk merchant is a type of merchant that a merchant account service provider and a merchant acquiring bank consider high-risk due to the company’s history of payments or the nature of business activities that can cause financial losses. Every bank and provider uses a different set of criteria to assess the risk level, although many of them remain the same.
The following factors related to company records usually determine whether a business is high-risk:
- New merchants without payment processing history tend to be categorised as high-risk merchants as there’s no track record to prove otherwise
- Exposure to fraud increases if a company engages in economic activities in foreign countries and therefore accepts international payments (certain countries are listed as high-risk third countries in terms of fraud and force the business to be labelled as a high-risk merchant)
- Large payments volume (the threshold varies from provider to provider)
- Repeated chargebacks, i.e. consumer payments reversed by banks, lead to loss of revenue and therefore affect the company’s reliability
- A high volume of returns or cancellations
- Low business credit score
- Multi-currency transactions
Aside from company records, certain industries are considered high-risk in terms of susceptibility to fraud, chargebacks and returns. This means that even if a merchant can demonstrate flawless transaction history, the industry they’re working in can still force them into the category of high-risk merchants.
For various reasons, the following industries and services are considered high-risk:
- Debt collection
- E-Commerce
- Travel
- Pawnshops
- Furniture and electronic stores
- Gambling
- Online dating
- Multilevel marketing
- SEO services
- CBD products
- E-cigarette and vape shops
- Adult industry
- Subscription services
- Services with recurring payment plans
If your company was categorised as a high-risk merchant by a merchant account service provider in the past, you may find it listed on such lists as Mastercard Alert To Control High-risk Merchants (MATCH), designed to protect other merchant account service providers and help them process new applications. This will, of course, impact negatively your application.
High-Risk Merchant Account Providers in Europe
In Europe, plenty of well-known banks and merchant account providers offer an array of services to high-risk merchants. However, not every one of them is likely to accept every industry, which is why you should have a closer look at every reputable provider’s history of rejections of businesses operating in certain industries that may disrupt business operations.
The following merchant account providers are likely to help you open and service a high-risk merchant account for you:
- International Bank Services (IBS) (UK-based but offers merchant accounts in various European countries for gaming, pharmaceuticals casinos and other industries)
- PayPal (all-in-one commerce package with no monthly fees for borderless transactions)
- iPayTotal (the UK and Estonia-based sales partner for merchant acquiring banks specialising in credit and debit card set-up for forex, gaming, travel and other industries)
- European Merchant Accounts (Latvia and Italy-based provider specialising in credit card payments set-up and servicing for digital financial services, online gambling, startups, online alcohol stores and other industries)
- SecurionPay (Switzerland-based provider specialising in online payments for companies with subscription-based billing models, forex, dating, etc.)
- MerchantScout (UK-based, specialises in insurance, pharmacy, financial services, jewellery, works with banks in Western Europe to service the entire EU region)
When searching for a high-risk merchant account provider, pay attention to the following aspects:
- Licences (the provider must be permitted to work in the countries where your company operates)
- Pricing model (ideally no hidden fees and the published fees are acceptable)
- They usually aren’t publicly available, since prices for high-risk merchants are customised and communicated on an individual basis
- An understanding of your area of business (ideally experienced in your industry and countries where you operate, familiar with relevant legal requirements)
- Onboarding and payments software (up-to-date, easy-to-use, customisable, flexible and supporting numerous payment set-ups, e.g. your selected type of payment gateways)
- Flexibility (ideally negotiable pricing, terms and conditions and features of the payment products and services)
- Security and compliance (guaranteed secure payments, compliance with payment services regulations, fraud prevention policies and software)
- Customer support (knowledgeable, responsive and ready to go the extra mile when your business is facing a challenge)
How to select a high-risk merchant account provider:
Define your business needs and payments preferred by your customers
Make sure your business credit score is acceptable (if needed, find ways to improve it prior to submitting an application)
Research and compare merchant account service providers and merchant acquiring banks to ensure they’re likely to meet your business needs
Eliminate all the providers that might not be licensed in the region or country you’re working in as compliance is of paramount importance
Shortlist only the providers familiar with the area of your business and are most likely to accept your products and services and the level of inherent risks
Make sure you’re prepared to meet all the requirements and pay higher fees specified by the selected providers
Requirements for High-Risk Businesses
To open a high-risk merchant account, you first need to look at specific criteria, prepare required documents and fill out a general application usually available on the provider’s website.
Generally, to open a merchant account, you will ideally have to demonstrate the following:
- Good credit score
- Flawless history of transactions
- No history of bankruptcy
- No blacklisted previous merchant accounts
- Low level of susceptibility to payment fraud
If your business doesn’t meet such criteria, it’s likely it will be categorised as a high-risk merchant.
Your eligibility, including all of the above aspects, will be assessed by looking at the following documents:
Incorporation documents or equivalentShareholders certificateTax returns documentsA business licence (if your business is licensable)A description of products or services the company sells, including marketing materialsBilling, shipping and returns policy
- Proof of registered address
- Corporate bank account details, including bank statements from the previous few months
- Your company’s payment processing history
- Financial statements (3-6 previous months)
- Proof of identity of the signatory of the account as well as shareholders and directors
How to Open a High-Risk Merchant Account in Europe
To open a high-risk merchant account, you’ll first have to go through the regular merchant account opening process where the level of risk will be assessed, and your business will be categorised accordingly. Providers often use AI-powered decision-making tools to assess applications, which makes their decisions as fair and as accurate as possible.
You may choose to apply via a high-risk merchant account provider or directly to a merchant acquiring bank. Depending on the complexity of your business, it may take up to a month to open a new high-risk merchant account, which is way lengthier compared to low-risk merchant accounts.
The process of opening a high-risk merchant account:
- Select a merchant account service provider or a merchant acquiring bank that supports high-risk merchants, preferably in your industry
- Check their requirements carefully as they vary from provider to provider
- Submit an application for a merchant account along with required documents to a merchant account service provider or directly to or a merchant acquiring bank
- When applying for a high-risk merchant account, expect to be thoroughly checked and be prepared to provide additional information during the underwriting process
- When the application is processed, a merchant account service provider categorises the business either as high-risk or low-risk according to their specific criteria
- If you applied via a merchant account service provider and your application is successful, the provider proceeds to find a bank that will agree to open a high-risk merchant account for you
- The merchant acquiring bank approves your application
- You receive a contract for your new account (read it very carefully and negotiate if needed prior to signing it)
- You’re finally onboarded by the merchant acquiring bank
Conditions for High-Risk Merchants
Once you’ve been granted a high-risk merchant account in Europe, you’ll have to work under particular conditions, which usually translate into less flexibility and more accountability.
High-risk merchants are typically required to:
- Pay higher set-up, processing, chargeback and other fees set by merchant acquiring banks and other payment service providers
- Sign longer contracts with more terms and conditions
- Have periodic transaction volume caps (only a certain amount of transactions could be allowed during a certain period of time)
- Have one of the below cash reserves for a merchant account service provider to verify transactions safely
- Rolling reserve (when the payment processor sets up to 10% of every completed transaction aside, which is sent to the merchant later)
- Capped reserve (when the payment processor withholds a certain percentage of each completed transaction until the total reaches a pre-established level)
- Upfront reserve (when the merchant sends a pre-established amount as a reserve to the payment processor to get access to all the completed transactions)
- More technological requirements to ensure compliance with relevant regulations
Although opening a high-risk merchant account in Europe demands quite a lot of effort due to the inherent risks, our team here at Regulated United Europe is well-prepared to assist you in the most efficient way. We have eight years of experience in helping clients to open high-risk merchant accounts across Europe. We use our vast network of trusted partners in the European financial services industry to offer the most suitable and cost-effective solutions that improve the functioning of the companies we serve. Reserve a personalised consultation now and start growing your business in Europe.
FREQUENTLY ASKED QUESTIONS
How do high-risk merchant accounts work?
High-risk merchants are those companies that are considered high-risk by a merchant acquiring bank and a merchant account service provider due to their payment history or their business activities that may cause financial losses. Although many of the criteria remain the same, each bank and provider uses its own set of criteria to determine the risk level.
What are the signs that a business is a high-risk one?
- As there is no track record to prove otherwise, new merchants without payment processing experience are often classified as high-risk merchants.
- Those companies that participate in economic activities in foreign countries and accept international payments (some countries are listed as fraud-prone third countries which require the business to be branded as a high-risk merchant) are more vulnerable to fraud.
- Payment volumes exceeding a certain threshold (provider-specific thresholds)
- A company’s credibility is impacted by repeated chargebacks, which are reversed payments by consumers.
- Returns or cancellations in large numbers
- Score of low credit worthiness for businesses
- Transactions in multiple currencies
Could you give me an example of a high-risk business?
- Collection of debts
- Online commerce
- Traveling
- Pawnshops
- Furniture and electronic stores
- Gambling
- Online dating
What companies provide high-risk merchant accounts?
High-risk merchants have access to a wide range of high-profile banks and merchant account providers in Europe.
Some examples are listed below:
- Gaming, pharmaceuticals, casinos, and other industries are served by International Bank Services (IBS) (UK-based).
- With PayPal, you can conduct borderless transactions with no monthly fees.
- iPayTotal (the UK and Estonia-based sales partner for merchant acquiring banks specialising in credit and debit card set-up for forex, gaming, travel and other industries)
- In addition to providing credit card processing services, European Merchant Accounts specializes in setting up and servicing credit card accounts for digital financial services, gaming websites, startups, online alcohol stores and other industries.
- SecurionPay (Switzerland-based provider specialising in online payments for companies with subscription-based billing models, forex, dating, etc.)
- MerchantScout (UK-based, specialises in insurance, pharmacy, financial services, jewellery, works with banks in Western Europe to service the entire EU region)
What should I pay attention to when choosing a provider?
- In order for a provider to work in your country, he or she must be licensed in that country.
- The pricing model should be clear and without hidden fees (ideally no hidden fees will be charged)
- In general, high-risk merchant prices aren’t made public since they are custom-made for each merchant.
- You should have a thorough understanding of the industry and countries in which you operate (preferably experience in your industry and familiarity with relevant legal requirements)
- Software for onboarding and payments (up-to-date, easy-to-use, customizable, flexible, and supporting numerous payment setups, e.g. payment gateways of your choice)
- Payment products and services should be flexible in terms of pricing, terms and conditions, and features.
- Ensure the security of payments, comply with payment service regulations, and use fraud prevention policies and software.
- In the event of a challenge faced by your business, we will provide knowledgeable, responsive, and customer-oriented support.
What requirements must be met when opening a high-risk merchant account?
Ideally, you should be able to demonstrate the following when applying for a merchant account:
- Scores on credit are good
- Transaction history is flawless
- A bankruptcy history is not present
- Accounts of previous merchants were not blacklisted
- Fraudulent payments are less likely to occur
What’s the first step?
Your business will be categorised accordingly once you have gone through the regular merchant account opening process, where the level of risk is assessed. In order to assess applications fairly and accurately, providers often use AI-powered decision-making tools.
You may apply directly to a merchant acquiring bank or through a high-risk merchant account provider. The time required to open a high-risk merchant account can vary depending on the complexity of your business.
What is the process for applying for approval?
When you apply through a merchant account service provider and your application is successful, the provider finds a bank that will open a high-risk merchant account for you. Your application is approved by the merchant acquiring bank. Your new account contract will arrive (read it carefully and negotiate if necessary).
Can high-risk businesses take advantage of special conditions?
You’ll have to work under specific conditions once you’ve been granted a high-risk merchant account in Europe, which usually means less flexibility and increased accountability.
You’ll have to work under specific conditions once you’ve been granted a high-risk merchant account in Europe, which usually means less flexibility and increased accountability.
RUE, although we understand that setting up a merchant account for a high-risk business in Europe requires considerable effort, is well-equipped to assist you. As high-risk merchant account specialists in Europe, we have eight years of experience.
RUE customer support team
“Hi, if you are looking to start your project, or you still have some concerns, you can definitely reach out to me for comprehensive assistance. Contact me and let’s start your business venture.”
“Hello, I’m Sheyla, ready to help with your business ventures in Europe and beyond. Whether in international markets or exploring opportunities abroad, I offer guidance and support. Feel free to contact me!”
“Hello, my name is Diana and I specialise in assisting clients in many questions. Contact me and I will be able to provide you efficient support in your request.”
“Hello, my name is Polina. I will be happy to provide you with the necessary information to launch your project in the chosen jurisdiction – contact me for more information!”
CONTACT US
At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Vilnius, Prague, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.
Registration number: 304377400
Anno: 30.08.2016
Phone: +370 6949 5456
Email: [email protected]
Address: Lvovo g. 25 – 702, 7th floor, Vilnius,
09320, Lithuania
Registration number: 38421992700000
Anno: 28.08.2019
Email: [email protected]
Address: Twarda 18, 15th floor, Warsaw, 00-824, Poland
Registration number: 14153440–
Anno: 16.11.2016
Phone: +372 56 966 260
Email: [email protected]
Address: Laeva 2, Tallinn, 10111, Estonia
Registration number: 08620563
Anno: 21.10.2019
Phone: +420 775 524 175
Email: [email protected]
Address: Na Perštýně 342/1, Staré Město, 110 00 Prague