How to Lower Fees on High Risk Merchant Accounts
If your business falls under the “high-risk” category, you’re no stranger to higher transaction fees and operational costs tied to your merchant account. Whether you run an e-commerce shop, a subscription-based service, or deal with cryptocurrencies, these higher fees can eat into your profits significantly. But it doesn’t have to stay that way forever. By understanding why fees are so high and taking actionable steps to reduce them, you can turn your high-risk merchant account into a more affordable solution.
Here’s how you can lower your fees while still maintaining smooth payment processing for your business.
Why Are High-Risk Merchant Account Fees Higher?
Before we look at how to reduce fees, it’s important to understand why they exist. Merchant accounts categorize businesses as “high risk” if they have a higher likelihood of chargebacks, fraud, or regulatory scrutiny. This includes industries like online gaming, payday loans, subscription services, or adult entertainment.
Processors charge higher fees because they’re taking on more financial risk. These charges often include higher discount rates, monthly fees, chargeback fees, or even hidden costs. Recognizing where those costs come from is the first step in identifying ways to minimize them.
Actionable Ways to Lower Your High-Risk Merchant Account Fees
1. Shop Around for the Right Payment Processor
Not all payment processors treat high-risk businesses equally. Some specialize in serving businesses similar to yours, meaning they may offer better rates and terms that align with your industry. These processors understand specific risks and are often more transparent about fees.
When comparing providers, inquire about discount rates, per-transaction fees, chargeback penalties, and if they offer custom pricing based on the volume or type of transactions you process.
2. Analyze Your Transaction Data
High-risk merchants typically face scrutiny when their chargeback rates are high. By closely analyzing your transaction data, you can pinpoint patterns that cause chargebacks. This might include unclear refund policies, fraudulent transactions, or weak customer support.
Reducing chargebacks demonstrates to your processor that your business is managing risk better, which may qualify you for lower rates over time. Some processors even reward businesses for keeping chargeback rates below certain thresholds.
3. Negotiate Your Processing Rates
A lot of businesses overlook this simple yet effective tactic. If your high-risk merchant account has been active for at least six months to a year, you may already have leverage to negotiate better rates. Processors value consistency and trust; if you demonstrate a good track record of timely processing and low chargeback rates, they may be open to reducing certain fees.
Pro tip: Work with a consultant or payment specialist if you’re not comfortable negotiating directly.
4. Bundle Services for Discounts
Some merchant service providers offer bundle deals that include payment processing, fraud protection, and chargeback mitigation tools. By bundling these services with a single provider, you often secure discounts compared to sourcing them individually from different vendors.
Additionally, tools like fraud detection software can help prevent costly chargebacks, saving you money in the long run and improving your standing with credit card processors.
5. Optimize Your Payment Gateway Setup
Finally, evaluate your current payment gateway setup. Certain gateways are more compatible with high-risk industries and provide flexible fee structures. Look into switching to an alternative gateway that specializes in high-risk processing, as these companies often offer tailored solutions.
Likewise, make sure your billing cycle and payment methods are optimized for your demographic; recurring billing systems or alternative payment options (like ACH or cryptocurrency) can sometimes offset processing costs.
The Bottom Line
While high-risk merchant accounts might feel like an unavoidable cost of doing business, reducing fees is completely possible with the right strategies in place. By shopping for a better processor, reviewing your transaction patterns, and negotiating smarter deals, you can lower costs while providing a seamless payment experience for your customers.
If your business falls under the “high-risk” category, you’re no stranger to higher transaction fees and operational costs tied to your merchant account. Whether you run an e-commerce shop, a subscription-based service, or deal with cryptocurrencies, these higher fees can eat into your profits significantly. But it doesn’t have to stay that way forever. By…
