High-Risk Merchant Account Fees Explained

High-risk merchant account fees are the additional costs charged to businesses considered riskier, often because they face higher chargeback rates, greater potential for fraud, or operate in volatile industries. Unlike standard merchant accounts, high-risk accounts typically involve higher transaction rates, larger setup charges, and the addition of rolling reserves that protect providers from potential losses.

Credit card processing fees generally range from 1.5% to 3% per transaction, based on U.S. Federal Reserve data. These rates include lead components such as acquiring bank charges, card network (interchange) fees, and gateway fees. Beyond these rates, businesses may also encounter monthly maintenance costs, compliance-related expenses, and stricter reserve requirements.

This article will detail all the cost components, including per-transaction fees, monthly and setup charges, reserves, and chargeback costs, to help you understand the actual financial impact of operating with a high-risk merchant account.

Why High-Risk Accounts Cost More?

High-risk merchant accounts come with higher processing fees because providers have greater exposure when working with businesses in sensitive industries. The main reasons are fraud risk, frequent chargebacks, compliance responsibilities, and the limited number of payment processors willing to serve these businesses.

One of the most significant drivers is fraud and chargebacks. High-risk industries, such as online gaming, subscription services, or CBD, often face elevated dispute levels, which can result in additional penalties for payment processors. According to the Federal Trade Commission, U.S. consumers reported over 2.6 million fraud cases in 2023, highlighting the scale of risk processors must guard against.

Compliance adds another layer of cost. Processors working with high-risk merchants must meet stricter regulatory requirements, including anti-money laundering checks and enhanced identity verification. These safeguards increase the cost of maintaining the account. Not all banks or processors are willing to handle high-risk accounts, which reduces competition and allows those that do to charge higher fees.

Standard Fees for High-Risk Merchant Accounts

High-risk merchant accounts involve more than just elevated processing rates. Providers typically apply multiple layers of costs to safeguard themselves against fraud, chargebacks, and regulatory exposure. These fees can include per-transaction charges, fixed monthly costs, rolling reserves, and penalties tied to disputes or early termination. Understanding how each fee works makes it easier to anticipate expenses and compare processors on more than just their headline rate.

Let’s look more closely at the most common fees that merchants encounter.

Transaction Fees

Transaction fees represent the cost charged on every sale processed through the account. Standard merchants often pay between 1.5% and 2.5% per transaction, while high-risk merchants usually face higher rates in the 3% to 5% range. The gap may seem small at first, but it quickly adds up.

For example, a CBD retailer generating $50,000 in monthly sales would pay around $2,500 at a 5% rate compared with $1,250 at a 2.5% rate. This difference directly affects profit margins and highlights why merchants should pay close attention to the percentages quoted in their contracts. These elevated costs reflect the added exposure processors face when approving high-risk businesses.

Monthly Fees

Beyond per-sale costs, many high-risk accounts also carry fixed monthly charges that support account maintenance and security. These fees usually come in several forms:

• Monthly account fees that keep the account active
• Gateway fees for secure online payment processing
• PCI compliance fees that ensure data security requirements are being met

Although these amounts are minor compared to transaction fees, they still contribute to overall operating costs. They also remain due even during slower sales months, which means businesses must consistently budget for them. Compliance-related costs are significant because they ensure merchants meet standards such as PCI DSS, which helps protect both cardholders and companies from data breaches.

Setup & Application Fees

Some processors charge upfront fees when opening a new high-risk merchant account. These charges often reflect the additional work required to review applications, assess risk levels, and configure fraud tools or software integrations. While setup fees range from modest to several hundred dollars, they are not a universal cost.

Other providers may waive application fees to attract merchants, though this usually depends on the business type and perceived risk. Merchants should always ask whether these fees are required upfront and weigh the services’ value against the cost.

Rolling Reserves

A rolling reserve functions as a safety net for the payment processor. Typically, the provider holds back a small percentage of sales, often for several months, before releasing it to the merchant. This can mean significant cash is temporarily unavailable for a business processing large volumes of transactions.

For example, if a merchant processes $100,000 in sales in one month and the processor withholds 10% for 3-6 months, the business may not have access to $10,000 until the reserve period ends. Merchant Maverick explains that this practice shields processors from sudden losses tied to fraud or chargebacks. Merchants should plan for this delayed cash flow when managing their working capital.

Chargeback Fees

The merchant is charged a flat fee whenever a customer disputes a transaction. This cost typically falls between $20 and $100 per chargeback. Even minor disputes can become expensive because the fee is charged per incident, regardless of the transaction size.

The real impact, however, is not only financial. A high chargeback ratio can place the account at risk of higher fees or even termination. According to the Federal Reserve, emerging electronic payment systems, such as Pay-by-Bank, involve complexities in dispute resolution and fraud liability. Banks and merchants must allocate significant time and resources to handle disputes stemming from unauthorized or fraudulent transactions.

Moreover, unclear liability arrangements may expose merchants and banks to financial, operational, and reputational risks. Merchants operating in high-risk sectors must closely monitor chargebacks and take proactive steps to minimize them.

Early Termination Fees

Some providers include early termination fees in their contracts. These penalties apply when a merchant terminates the agreement before the full contract term has been completed. The cost may be a lump sum or the equivalent of all remaining monthly fees.

Early termination fees can create unnecessary financial pressure for merchants. The best way to avoid them is to negotiate contract terms upfront or choose providers that offer flexible, month-to-month arrangements. Reviewing the fine print can prevent costly surprises later.

Hidden Fees to Watch Out For

In addition to the standard fees associated with high-risk merchant accounts, businesses should also be mindful of less obvious costs that are not always emphasized during sales. These hidden charges can accumulate over time and directly impact overall profit margins, particularly for companies handling large volumes of transactions.

Some of the most common hidden fees include:

• Cross-border fees: When a customer uses a card issued in another country, processors often apply an additional percentage fee. According to Visa’s published fee structure, international transactions incur an International Service Assessment (ISA) fee of around 0.8%–1.2% and an International Acquirer Fee (IAF) of approximately 0.45%. These network charges are often passed directly to the merchant by high-risk providers, resulting in extra costs of about 1% or more per international sale.
• Currency conversion fees: If a payment is made in a currency different from the merchant’s account currency, processors typically add a conversion fee. This amount is added to normal processing rates, which means merchants selling to international customers may notice their margins shrinking more quickly than expected.
• Fraud monitoring add-ons: Many providers offer extra fraud prevention tools such as chargeback protection or advanced verification checks. These can be valuable, but they often come with additional subscription fees. Merchants should take time to understand whether these services are optional or automatically included in the contract.

Because these charges are less visible than transaction fees or monthly account costs, merchants often overlook them during initial negotiations. Reviewing agreements carefully and asking providers direct questions about international transactions, add-on services, and compliance tools helps prevent surprises later.

Comparing High-Risk vs Low-Risk Fees

While individual fees can seem manageable when viewed separately, the real cost difference between high-risk and low-risk merchant accounts becomes clearer when they are compared. Comparing the most common charges highlights not only the higher percentages applied to each transaction but also the additional expenses that often come with being classified as high-risk.

The table below compares typical fees so merchants can see how the two account types stack up in practice.

Fee Type	Low-Risk Merchant Account	High-Risk Merchant Account
Transaction Fees	1.5% – 2.5%	3% – 5%
Monthly Account Fees	$10 – $25	$20 – $50
PCI Compliance	$75 – $150 annually	$75 – $150 annually
Chargeback Fee	$15 – $25 per dispute	$25 – $100 per dispute
Rolling Reserves	Rarely applied	5% – 10% held for 3–6 months
Early Termination Fee	Often waived	$250 – $500+

How to Reduce High-Risk Processing Costs?

High-risk merchants cannot eliminate higher fees, but there are proven strategies to manage them more effectively. By reducing chargebacks, negotiating with providers, exploring alternative payment methods, and carefully selecting the right processor, businesses can better control costs and preserve their profit margins. Here are some ways to reduce high-risk processing costs:

1. Reduce Chargebacks

Chargebacks remain one of the most significant drivers of high-risk fees. Merchants can lower their ratios by using explicit billing descriptors, offering responsive customer support, and maintaining accurate product descriptions to reduce disputes. The Federal Trade Commission reported that U.S. consumers filed over 2.6 million fraud-related complaints in 2023, underscoring the importance of protecting against disputes and fraudulent activity for businesses. Maintaining a chargeback rate below 1% of total transactions is a key requirement for ensuring account stability.

2. Negotiate Fees

Even in high-risk industries, there is room to negotiate. Merchants processing higher volumes can secure lower per-transaction rates or request that setup fees and monthly minimums be waived. Asking providers for transparent pricing structures and comparing multiple offers helps identify where negotiation is possible.

3. Diversify with ACH, eCheck, or Crypto

Card transactions carry the highest processing costs, so diversifying payment options can reduce overall expenses. ACH and eCheck payments are less expensive per transaction than credit card processing, making them attractive options for recurring billing or larger transactions. Some merchants also integrate cryptocurrency payments, which can bypass traditional processing fees altogether; however, this option requires careful evaluation of volatility and regulatory considerations.

4. Choose the Right Provider

Not all high-risk processors operate with the same fee structures. Some specialize in particular industries and can offer more competitive pricing or fewer hidden costs. Merchants should compare multiple providers, focusing on headline rates and chargeback policies, reserve requirements, and contract flexibility. Selecting the right partner can make a measurable difference in long-term costs.

Frequently Asked Questions

How much do high-risk merchants pay in fees?

High-risk merchants typically pay 3% to 5% per transaction, as well as monthly account fees, PCI compliance costs, and rolling reserves where required. These expenses are higher than those of standard accounts due to the additional risk that processors take on.

Are rolling reserves always required?

Rolling reserves are not always mandatory. Whether a reserve is imposed depends on factors such as the merchant’s industry, history of chargebacks, and the policies of the chosen provider. Merchants with strong track records may secure lower or no reserve requirements.

What is the average chargeback fee?

The average chargeback fee for high-risk merchants ranges between $25 and $100 per incident. This fee is charged in addition to the cost of the disputed transaction and may increase if a business exceeds acceptable chargeback ratios.

Can high-risk merchants negotiate fees?

Yes, negotiation is possible in some instances. Merchants with higher processing volumes, lower chargeback ratios, or a proven business history can often secure reduced transaction rates or more favorable reserve terms by working with their provider.

Do high-risk accounts cost more than PayPal or Stripe?

Yes, they generally cost more. However, mainstream platforms such as PayPal and Stripe usually decline or suspend merchants operating in high-risk industries. In such cases, specialized high-risk processors remain the only reliable option.

Ready to Lower Your High-Risk Payment Costs with the Right Partner?

Securing a high-risk merchant account can feel complicated, especially with the extra fees, reserves, and approval requirements. As we have seen, the process involves understanding transaction fees, preparing for rolling reserves, managing chargebacks, and being aware of hidden costs. It also requires choosing the right provider that understands your industry and offers transparent pricing. With the proper preparation and guidance, approval becomes far less stressful. Businesses that stay proactive, maintain strong records, and compare providers carefully are more likely to secure better terms and reduce long-term costs. At 2Accept, we specialize in helping high-risk merchants navigate this process with clarity and confidence. Our team provides tailored solutions that minimize costs while keeping your payments secure and confidential. If you are ready to start, explore our High-Risk Merchant Account Services today and see how we can help your business grow.