Opening and operating any business takes a certain amount of calculated risk. Culture within the United States encourages entrepreneurs to take risks. However, most banking institutions and merchant service providers are only willing to provide certain businesses with payment processing services. The businesses they aren’t willing to accept are high risk merchants, products, or services. Being a high risk merchant can be a problem when it comes to getting the financial support you need to operate your business. This includes getting a merchant account, check processing, ACH processing, or a merchant cash advance.

Wondering if you qualify as a high risk merchant? Here are some of the most common industries, products, and services that require a high risk merchant account or some form of high risk payment processing:

  • E-Cigarettes – The so-called vaping industry has been blowing away the tobacco industry in terms of competitive growth over the last several years. By 2013, this became a billion dollar industrywith over 3,500 vape stores throughout the United States. Some of those stores brought in as much as $1.3 million a year. Today, it’s grown even more to become a near $2.5 billion industry. So with such massive financial success, why is it considered a ‘high risk’ business? This is mostly due to fears of government regulations that may crack down on the now booming industry over health and safety concerns.
  • Firearms – Like the e-cigarette industry, businesses dealing in firearms and ammunition are frequently labeled as ‘high risk’ due to concerns of impending or current government regulations. Part of this stems from the now-defunded Operation Choke Point, but gun control has long been a hot button political issue. That being said, businesses that deal in firearms have also experienced unprecedented growth over the last couple years. According to The Firearms and Ammunition Industry Economic Impact Reportfiled by the National Shooting Sports Foundation, the firearm and ammunition industry grew from $19.1 billion in 2008 to an astounding $42.9 billion in 2014.  
  • Adult-Oriented Goods & Services – While federal and local restrictions and regulations also play a part in why this industry is considered a ‘high risk’, other reasons for the labeling include the propensity for adult-oriented businesses to offer subscription based services, process a large volume of transactions within a short period of time, and lack a detailed operating history; not to mention the majority of the products sold are risqué. But sex sells, and everything from sex toys to erotica books as well as web cams and strip clubs are huge revenue-producing titans.
  • Collections – The general public probably cringes every time they hear about a debt collection agency. The reason collection agency businesses are high risk merchants is two-fold: First, the idea of paying off debt with a credit card only creates greater debt compromising the integrity of the financial system. Second, many collection agencies are not contract-based, but rather people that have purchased charged-off debt and are trying to collect on that written-off debt or even worse are complete frauds attempting to take advantage of vulnerable, unsuspecting citizens.  
  • Credit Repair – The demand for credit repair companies rose in tandem with the growing amount of Americans with credit card debt. Unfortunately, the surge in credit repair businesses included some people entering the industry with little or no hard understanding of how to conduct credit restoration correctly, as well as a fair amount of unscrupulous scam artists wanting to make a quick buck. This influx led to a high number of chargebacks from consumers feeling duped by credit repair merchants leading to merchant service providers classifying all credit repair merchants as high risk. The reality is that you cannot charge someone for a something that they can get or do for themselves free of charge. However, if the credit repair is part of an overall service; that business model can work if set up appropriately. 
  • Travel Agencies – People of all ages and interests love to travel and operating a travel agency or other travel-based business such as time shares or vacation packages are great for merchants who love to provide positive service opportunities. However, while most customers of these businesses report high customers satisfaction, historical data does report that there is also a significant portion of travel consumers that are likely to dispute and chargeback travel agency transactions due to dissatisfaction with accommodations or other expectations. For this reason, travel businesses are considered to be high risk merchants and need a high risk merchant account. Many times this is centered on the terms and conditions of the sale as well as the billing model, particularly advanced billing, is problematic.
  • Head Shops – With the rise in popularity and legalization of marijuana for both medical and personal use in recent years; head shop merchants are taking advantage of one of the fastest-growing industries in the United States. Head shops sell everything from pipes and bongs to t-shirts and vinyl records. They are the essence of novelty products yet the scourge of merchant service providers because the majority of products sold fall into a grey area of legality and even though they aren’t selling marijuana or these products could conceivably be used for tobacco (also a high risk merchant, yet legal product); they are under the same microscope of scrutiny as any other high risk merchant.
  • Cigars & Tobacco – You can buy cigars, cigarettes, and other tobacco products in any convenience store or gas station in the country; however, if the primary product sold in your store consists of tobacco you are considered a high risk merchant. Age verification and other product-related regulatory issues spawn concern from merchant service providers and those that wish to sell over the internet find it most difficult. Even hookah merchants fall into the tobacco merchant category if they want to sell any product that can be lit and inhaled such as shisha.
  • Nutraceuticals & Supplements – There are more vitamins, weight loss products, energy enhancers, stamina enhancers, anti-aging products in the market now than ever before. It seems like every day there is something new that makes promises that it may or may not be able to stand behind. It’s a convoluted industry with an overwhelming number of trial offers and recurring billing model businesses that can confuse consumers. Furthermore, there are too often products that are marketed in a way that is misleading to consumers and are not approved by the FDA for their intended use. This puts these products in the top tier of high risk merchants.


At Painless Processing, we believe high-risk translates primarily to high-reward. The opportunity for growth and prosperity is greater in these industries and many others labeled high risk just like them. That’s why we are proud to specialize in providing high risk merchants with high risk merchant accounts for businesses throughout a variety of industries, products, and services. If you find yourself in a high risk merchant category, Painless Processing is ready and able to provide the expert advice and services you need in order to make sound payment processing decisions to operate and grow your business. Contact us today and find out why we make high risk merchant services so easy… it’s Painless.


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