High-Risk Processing Guide

What Makes You "High-Risk"?

Payment processors categorize merchants as high-risk based on:

Industry Flags

Business Model Flags

• Recurring billing — Subscriptions, memberships, auto-renewals
• High ticket — Average order >$500 (refund/chargeback exposure)
• Future delivery — Pre-orders, crowdfunding, event tickets
• MOTO — Mail Order / Telephone Order (no 3DS protection)
• International — Processing from multiple regions or high-risk countries

Risk History Flags

• Prior account terminations
• Chargeback rate >0.9%
• Previous fraud losses
• MATCH list placement

High-Risk Underwriting Requirements

Standard processors want 3-5 docs. High-risk underwriters want 15-20. Expect to provide:

Business Documentation

• Business license (state + local)
• Articles of incorporation
• EIN letter from IRS
• Voided check or bank letter
• Proof of business address (utility bill, lease)
• Driver's license for all owners >25%

Financial Documentation

• 3-6 months of bank statements
• Processing statements (if you have prior history)
• Financial projections (if new business)
• PCI compliance certificate

Product/Service Documentation

• Product samples or detailed service descriptions
• Supplier agreements (for physical products)
• Website screenshots (all pages: checkout, ToS, refund policy, contact)
• Marketing materials (ads, landing pages, email flows)
• Customer service process documentation

Compliance Documentation

• CBD: Lab reports, state licenses, THC compliance certs
• Supplements: FDA disclaimers, ingredient lists, health claim reviews
• Adult: 2257 compliance (age verification records)
• Crypto: MSB registration, AML policy, KYC procedures

High-Risk Processor Terms

Expect stricter terms than standard merchants:

Getting Approved: The Process

Step 1: Pre-Qualify Your Profile

Before applying, run a free GuardScore audit to see:

• Which high-risk processors accept your specific profile
• What documentation gaps you need to fix
• Expected rates and reserve terms

Why this matters: Each application dings your merchant credit. Applying to 5 wrong processors before finding the right one = worse terms when you finally get approved.

Step 2: Fix Documentation Gaps

Most denials happen because of incomplete applications. Common gaps:

• Website missing refund policy or contact info
• Terms of Service don't match actual product/billing
• No clear product delivery timeline
• Business address is a PO box (red flag)

Step 3: Apply with a Warm Intro

Cold applications to high-risk processors get auto-denied 60-70% of the time. Warm intros (through a broker or aggregator) get approved 85%+ of the time.

GuardScore provides warm intros to vetted high-risk processors based on your profile.

Step 4: Negotiate Terms

Everything is negotiable in high-risk processing:

• Rolling reserve: Start at 10%, negotiate down to 5% after 90 days clean history
• Volume cap: Get it in writing that cap increases after 3 months
• Chargeback threshold: Ask for 1.5% instead of default 1.0%
• Early termination: Negotiate down to 6-12 months instead of 3 years

Staying Approved: Compliance Setup

Chargeback Management

High-risk merchants get terminated at 1.0-1.5% chargeback rate (vs 1.5-2% for standard). You need:

• Ethoca + Verifi alerts — Catch disputes before they become chargebacks ($15-25/month)
• RDR enrollment — Rapid Dispute Resolution auto-refunds to prevent CB ($0.10-0.20 per alert)
• Clear billing descriptors — Use recognizable company name, not payment processor name
• Pre-shipment fraud screening — For physical products, use Sift/Signifyd/Riskified

Customer Service Standards

High-risk processors audit your CS quality. Requirements:

• Phone number on website (must answer during business hours)
• Email response within 24 hours
• Refund requests processed within 48 hours
• Clear cancellation process (no hidden steps)

RDR + VAMP Compliance

If you're doing $100k+/month, you must be enrolled in:

• Visa RDR — Rapid Dispute Resolution (prevents disputes from hitting your ratio)
• VAMP — Visa Acquirer Monitoring Program (tracks high-risk merchants)
• Mastercard MATCH — Terminated merchant database (stay off this list)

Backup Processor Strategy

High-risk merchants should have 2-3 processors, not 1:

Primary Processor (70% of volume)

• Best rates and terms
• Handles bulk of clean transactions
• Most restrictive compliance requirements

Backup Processor (20% of volume)

• Slightly higher rates
• More flexible compliance
• Handles risky transactions (large tickets, new geos)

Emergency Processor (10% of volume / on standby)

• Highest rates but instant approval
• Only use when primary/backup are down
• Maintains relationship so you're not scrambling during a freeze