Starting a business in an industry like CBD, travel, or online gaming comes with a unique set of hurdles, and payment processing is often the biggest one. Many traditional processors and banks will turn you away simply because of the industry you’re in, citing risks they aren’t willing to take. This doesn’t mean you can’t run a successful business; it just means you need a different kind of financial partner. You need a provider who specializes in your field and understands its complexities. This article is your roadmap to securing a hard to place merchant account from the start, helping you find a reliable partner who can handle your specific needs and set you up for long-term success.

Key Takeaways

• “Hard to Place” is a business category, not a judgment: Processors use this label based on measurable risk factors like your industry, chargeback rates, and regulatory environment. Understanding why your business fits this profile is the first step to finding a provider equipped to support you.
• Seek a specialist partner, not a general processor: Your best bet is a provider with specific experience in your industry. Prioritize partners who offer transparent pricing, robust fraud prevention tools, and expert support for managing chargebacks.
• Proactive management is your best strategy: You can directly influence your approval odds and long-term success. A strong application, a clear chargeback prevention plan, and consistent compliance are essential for getting approved and maintaining a healthy merchant account.

What Makes a Merchant Account “Hard to Place”?

If you’ve been told your business is “hard to place” or “high-risk,” it can feel a little discouraging. But don’t worry—it’s not a judgment on your business’s potential. It’s simply a classification that payment processors use to categorize businesses based on their perceived level of financial risk. Think of it as a label that helps processors understand the unique challenges and characteristics of certain industries or business models. Understanding why your business falls into this category is the first step toward finding a payment partner who gets it and is equipped to support you.

How They Differ from Standard Accounts

So, what’s the actual difference? A standard merchant account is for businesses that processors see as having a low risk of financial loss from things like customer disputes or fraud. A hard-to-place account, on the other hand, is a specialized service for businesses that don’t fit that low-risk mold. Because the processor takes on more potential risk, these accounts operate under a different set of rules. This usually means they come with higher processing fees and stricter terms to protect the processor from potential losses. It’s not personal; it’s just a different business model that requires a more tailored approach to payment processing.

Key Factors That Determine Your Risk Level

Several factors can land your business in the hard-to-place category. It’s rarely just one thing, but a combination of elements that processors evaluate. Your industry is a big one; businesses in sectors like CBD, travel, supplements, or online gaming are often automatically considered high-risk due to complex regulations or a higher likelihood of customer disputes. Another key factor is your history with chargebacks. If more than 1% of your sales are disputed by customers, it raises a red flag. Your business model also plays a part—if you sell high-ticket items or use a subscription model, that can increase your risk profile. Finally, your personal and business credit history can also influence a processor’s decision.

Does Your Business Need a Hard to Place Account?

If you’ve been turned down for a standard merchant account, it can feel frustrating and personal. But being labeled “high-risk” or “hard to place” isn’t a judgment on your business’s potential—it’s a classification based on a processor’s perceived level of risk. Payment processors look at two main things: your industry and your business model. Certain industries come with a higher likelihood of chargebacks or regulatory scrutiny, while specific business practices can raise red flags for underwriters.

Understanding where your business fits is the first step toward finding a payment partner who gets it. It’s not about changing who you are; it’s about finding a provider equipped to handle the unique challenges and opportunities of your industry. Think of it this way: a standard account is like an off-the-rack suit, designed to fit most businesses. A hard to place account is custom-tailored, built to support businesses that don’t fit the standard mold. Before you can find the right fit, you need to know your measurements. Let’s break down the common factors that land businesses in this category.

Common High-Risk Industries

Sometimes, your industry alone is enough to require a specialized merchant account. Processors are cautious with sectors known for high chargeback rates, complex regulations, or reputational risk. If your business operates in one of these spaces, you’ll likely need a provider who specializes in high-risk solutions.

Common high-risk industries include:

• Adult Entertainment: Due to the nature of the content and high chargeback potential.
• Gambling and Gaming: This industry is heavily regulated and prone to disputes.
• Travel and Tourism: High-ticket sales and long lead times between purchase and service delivery increase the risk of cancellations and chargebacks.
• CBD and Cannabis Products: Evolving legal landscapes make this a complex area for payment processing.
• Nutraceuticals and Supplements: These businesses often face scrutiny over product claims and a higher rate of customer disputes.

Business Traits That Can Raise Red Flags

It’s not always about what you sell—sometimes, it’s about how you operate. Certain business characteristics can signal higher risk to processors, even if you’re in a traditionally “safe” industry. These traits often point to a greater potential for chargebacks, fraud, or financial instability, which makes underwriters nervous.

Here are a few operational red flags:

• High Chargeback Ratio: If more than 1% of your transactions result in a customer dispute, processors will take notice.
• Unpredictable Sales Volume: Businesses with inconsistent revenue, like those selling event tickets or using a multi-level marketing model, are seen as less stable.
• Large-Ticket Sales: Selling high-value items like jewelry or furniture means a single chargeback can result in a significant loss for the processor.
• Poor Credit History: A low personal or business credit score can make it difficult to get approved for any type of financing, including a merchant account.

Why Are Some Businesses Labeled “Hard to Place”?

If you’ve been told your business is “hard to place” or “high-risk,” it’s easy to feel discouraged. But it’s important to know this isn’t a judgment on your business idea or your character. For payment processors, it’s purely a risk assessment. They’re looking at several factors to predict the likelihood of financial loss, mainly from customer disputes and fraud. A merchant account acts like a line of credit, and processors need to be sure you can cover your end of the deal. Let’s break down the three main reasons a business might fall into this category.

The Impact of Chargebacks and Fraud

A chargeback happens when a customer disputes a transaction with their bank, leading to a forced reversal of the funds. While every business deals with occasional chargebacks, a consistently high rate is a major red flag for processors. It can signal issues with your product, customer service, or even fraudulent activity. Since the processor is financially liable if your business can’t cover these reversals, they get nervous when your chargeback ratio climbs. Certain industries, like travel, subscription services, and digital goods, naturally have higher chargeback rates, which automatically places them in a higher-risk tier.

The Role of Regulatory Compliance

Some industries are simply more complicated than others due to heavy government oversight and strict rules. Businesses in sectors like CBD, firearms, online gaming, or debt collection operate in a complex legal landscape. For a payment processor, this adds an extra layer of work and risk. They have to ensure that both your business and their own services are in full compliance with all applicable laws, which can change frequently. This regulatory burden makes processors more selective about who they partner with in these industries, as the potential for legal and financial penalties is much higher.

How Your Financial Stability Plays a Part

When you apply for a merchant account, processors will look at both your business’s financial health and your personal credit history. Think of it from their perspective: they are fronting the money for your transactions and need assurance you can cover any refunds or chargebacks that come your way. A history of financial instability or a poor credit score can suggest that you might struggle to meet these obligations. It’s a straightforward risk calculation. A solid financial footing demonstrates that you’re a reliable partner who can manage your finances responsibly, reducing the processor’s potential for loss.

The Challenges of Being a Hard to Place Merchant

Getting approved for a hard to place merchant account is a huge step, but it’s important to know what to expect once you’re up and running. Because your business operates in a higher-risk category, your payment processing will look a little different from a standard account. Understanding these differences ahead of time will help you manage your finances and operations without any surprises. Let’s walk through the main challenges you’ll likely encounter.

Expect Higher Processing Fees

The most immediate difference you’ll notice is the cost. Processors charge more to service high-risk accounts because they are taking on a greater financial liability. Industries with high chargeback rates or regulatory gray areas pose a bigger threat of financial loss, and processors offset that risk with higher fees. While standard accounts might have straightforward pricing, high-risk merchant accounts often come with increased transaction rates, monthly fees, and other charges. It’s not personal—it’s just the processor’s way of protecting itself. When you’re shopping for a provider, make sure you get a crystal-clear breakdown of all potential costs.

Prepare for a Tougher Application

If you’ve ever applied for a standard merchant account, you’ll find the process for a hard to place one is much more intensive. The application process is strict because the provider needs to do a deep dive into your business’s financial health and history. You’ll be asked to provide extensive documentation, which could include several months of bank statements, your processing history, supplier agreements, and detailed financial records. They will also perform a thorough check of your personal credit history. It can feel invasive, but it’s a necessary step for the processor to verify that your business is stable and legitimate.

Understanding Rolling Reserves and Holdbacks

A rolling reserve is one of the most common features of a high-risk account, and it can be a shock if you’re not prepared. A reserve is a portion of your revenue that the processor holds for a set period to cover potential losses from chargebacks or fraud. For example, a processor might hold 10% of your daily sales for 180 days on a “rolling” basis. This means funds are continuously held and released after the holding period ends. It’s a non-negotiable safety net for the processor, but it can impact your cash flow. Make sure you fully understand the reserve agreement before signing.

Fewer Choices for Payment Processors

When you’re labeled high-risk, your options for payment processors shrink considerably. Many traditional banks and mainstream providers simply refuse to work with businesses in certain industries because their internal risk tolerance is too low. They see high chargeback rates and complex regulations as a dealbreaker. This is why many hard to place merchants feel stuck when searching for a reliable partner. The good news is that there are specialized providers—like us at MBNCard—who focus specifically on supporting high-risk businesses. Finding the right partner who understands your industry is key to long-term success.

What to Expect During the Application Process

Applying for a hard-to-place merchant account is more thorough than a standard application, but it’s nothing to be intimidated by. Processors just need a clearer picture of your business to understand the risks involved. Knowing what’s coming will help you prepare, making the entire experience smoother and faster. Let’s walk through what you can expect, from the paperwork you’ll need to how your financial history is evaluated.

Gathering the Right Documents

Being prepared is your best strategy. The underwriting team will need a detailed look at your business, so start gathering your documents ahead of time. While every provider’s list is slightly different, you’ll almost always need your business license, articles of incorporation, and a voided check for the bank account where you’ll receive deposits. You should also have several months of business bank statements and any available payment processing statements on hand. These records give processors a clear view of your sales volume and chargeback ratio.

The Underwriting and Approval Timeline

While some standard accounts get approved almost instantly, the timeline for a hard-to-place account is usually longer. After you submit your application, it goes to an underwriting team for a detailed review. This is where a real person looks at your documents, website, and business model to assess risk. This careful process can take anywhere from a few business days to a week or more, depending on your industry and the complexity of your application. A well-prepared application with all the necessary documents can definitely help speed things up.

Why Your Financial History Matters

It helps to think of a merchant account as a type of credit line. When a customer disputes a charge, the processor is financially responsible if your business can’t cover the refund. This is why your financial history, both personal and business, is so important. Underwriters will look at your credit score and bank statements to gauge your financial stability. If you have poor credit or a limited financial history, it doesn’t automatically disqualify you, but it does signal higher risk. As a result, you may be offered an account with stricter terms, like higher fees or a rolling reserve.

How to Choose the Right Provider

Finding the right payment processor when you’re considered “hard to place” can feel like a huge challenge, but it’s all about finding a true partner. This isn’t the time to just pick the first option you find. You need a provider who understands the unique hurdles your business faces and has the tools and expertise to help you clear them. A great partner will do more than just process payments; they’ll help you manage risk, fight chargebacks, and grow your business securely. As you compare your options, focus on these key areas to ensure you’re making the best choice for your company’s future.

Look for Industry-Specific Experience

When you’re vetting providers, make this your first question: “What experience do you have with businesses in my industry?” A processor that specializes in high-risk or hard-to-place accounts will have a much deeper understanding of your specific challenges. They’ll know what underwriters are looking for and can help you build a stronger application from the start. This kind of industry expertise isn’t just a nice-to-have; it directly affects the quality of service and support you’ll get. A specialist knows the common pitfalls and can offer tailored advice on how to avoid them, which is something a generic, one-size-fits-all provider simply can’t do.

Demand Clear and Honest Pricing

Hidden fees and confusing statements are major red flags. A trustworthy provider will be upfront about their pricing structure and willing to walk you through every line item. Don’t be afraid to ask for a complete schedule of fees, including setup costs, monthly minimums, and chargeback fees. You should look for fair contract terms and a provider who can offer a transparent pricing model that fits your business needs. Your goal is to find a partner who helps you protect your bottom line, not one who chips away at it with surprise charges.

Prioritize Fraud and Security Tools

For any hard-to-place business, managing risk is a top priority. That’s why it’s essential to choose a provider that offers a robust suite of fraud and security tools. These features are your first line of defense against fraudulent transactions and can save you from costly chargebacks down the road. Ask potential providers what they offer for fraud prevention, such as Address Verification Service (AVS), CVV verification, and other advanced security filters. The right tools not only protect your revenue but also build trust with your customers, assuring them that their data is safe with you.

Find Strong Chargeback Support

Chargebacks are often an unavoidable part of doing business in a high-risk industry, so how your provider handles them is critical. A reliable partner should have a clear, effective plan for helping you manage and dispute chargebacks. Before you sign a contract, ask about their chargeback support system. Do they offer tools to help you gather evidence? Is there a dedicated team you can talk to for guidance? Strong chargeback management support is vital for protecting your merchant account and maintaining your business’s financial health, so make sure you have an expert in your corner.

Don’t Settle for Bad Customer Service

When you have a problem with a payment or a question about your account, the last thing you want is to be stuck waiting on hold or talking to a bot. Excellent customer service is non-negotiable. You need a provider with an accessible and knowledgeable support team that can give you real answers when you need them most. Before committing, read reviews and consider calling their support line to see how responsive they are. A provider who invests in quality customer service is showing you that they value your business and are prepared to support you for the long haul.

Breaking Down the Costs of a Hard to Place Account

When you’re running a business that’s considered hard to place, the costs of payment processing can feel like a mystery. The truth is, you should expect to pay more than a standard, low-risk business. Processors take on more liability when they partner with you, and the pricing reflects that. But higher costs don’t have to mean confusing or unfair costs. Let’s break down exactly what you can expect to pay for.

Understanding Your Processing Rates

The most significant cost you’ll encounter is your processing rate—the percentage you pay on each transaction. For hard to place accounts, these rates are higher to offset the processor’s risk. Instead of a one-size-fits-all price, most high-risk providers offer custom pricing based on your specific industry, sales volume, and business history. This means you’ll need to get a personalized quote. When you do, ask about the pricing model they use, whether it’s interchange-plus, tiered, or flat-rate, so you can accurately compare offers and understand exactly what you’re paying for with every sale.

Accounting for Setup and Monthly Fees

Your per-transaction rate is only one piece of the puzzle. Hard to place accounts often come with additional fees that you need to factor into your budget. Be prepared for a one-time setup fee to get your account established. You’ll also likely see recurring monthly or annual fees, which can include a monthly minimum processing fee, a payment gateway fee, and a statement fee. Before you sign any contract, ask for a complete and transparent schedule of every potential fee. This prevents surprises down the road and gives you a true picture of your total processing costs.

What to Know About Reserves and Other Charges

One of the biggest differences with a hard to place account is the potential for a reserve. A rolling reserve is a common requirement where the processor holds a percentage of your sales for a set period—typically a few months—to cover any potential chargebacks. Think of it as a security deposit for the processor. While it can impact your immediate cash flow, it’s a standard practice in high-risk industries. You should also be aware of other charges, like steep fees for every chargeback you receive. Understanding these account reserves and related costs upfront is crucial for managing your finances effectively.

Who Offers the Best Hard to Place Accounts?

When your business is considered hard to place, you can’t just go with any payment processor. You need a partner who truly understands the high-risk landscape and has the banking relationships to back it up. The right provider won’t just get you approved; they’ll offer the tools and support you need to manage risk and grow your business. Here are a few of the top providers who specialize in hard-to-place merchant accounts.

MBNCard: Our Specialized Solutions

At MBNCard, this is our core business. We don’t just accept hard-to-place accounts; we build our services around them. We know that a one-size-fits-all approach doesn’t work for businesses with unique models or higher risk profiles. That’s why we focus on creating tailored merchant account solutions that fit your specific operational needs. Our goal is to get you set up to accept payments securely and efficiently, without the headaches you might have experienced elsewhere. We work directly with you to understand your business and make sure you have the right tools and support to succeed.

PaymentCloud: Customizable Options

PaymentCloud has built a strong reputation for its hands-on customer support and highly flexible service offerings. For a hard-to-place business, this level of customization can be a game-changer. Instead of trying to fit your business into a rigid processing box, they work to adapt their services to you. This approach is especially helpful if your business has specific needs that other processors can’t meet. Their focus on service makes them one of the best high-risk merchant account providers for businesses that value a supportive partnership.

Durango Merchant Services: Industry Focus

Some providers excel by focusing on very specific, and often very challenging, industries. Durango Merchant Services is a great example of this. They have deep experience working with businesses that many other processors turn away, such as auction houses or certain e-commerce models. Their success comes from years of building strong relationships with acquiring banks that understand these niche markets. If your business operates in a particularly tough-to-place industry, finding a provider with proven industry experience like Durango can make the approval process much smoother.

Soar Payments: High-Risk Expertise

Soar Payments is another provider that dedicates its entire focus to the high-risk market. Their mission is to make the process of getting a merchant account simpler and more accessible for businesses that are typically considered hard to place. By concentrating exclusively on this segment, their teams and systems are designed to handle the complexities that come with it. They offer a range of high-risk payment processing services, ensuring that businesses get the specialized attention and underwriting expertise they need to get approved and stay operational.

How to Improve Your Approval Odds

Getting approved for a hard-to-place merchant account can feel like a tough hurdle, but it’s far from impossible. Instead of just submitting an application and hoping for the best, you can take proactive steps to make your business a more attractive partner for payment processors. It’s all about demonstrating that you’re a responsible business owner who understands the risks and has a solid plan to manage them. By preparing thoroughly and presenting your business in the best possible light, you can significantly increase your chances of getting the green light. Think of it as building a case for your business—the more organized and prepared you are, the more confident a provider will be in working with you.

Strengthen Your Application

Your application is the first impression you make on a potential processor, so make it a good one. A complete, accurate, and well-organized application shows that you’re serious and professional. Before you even start, gather all your essential paperwork. This includes your business formation documents, recent financial statements, bank statements, and any processing history you have, including your chargeback rates. Be prepared for a close look at your personal and business credit history. Honesty is key here; don’t try to hide or downplay potential issues. A strong application tells a clear story about your business’s stability and your readiness to handle payments responsibly.

Reduce Your Business’s Risk Profile

Processors evaluate risk by looking at your industry and your business practices. While you can’t change your industry, you can absolutely show that you’re actively working to minimize risk. Start by creating a clear and effective chargeback prevention plan. Use fraud detection tools to screen transactions and protect against bad actors. It’s also crucial to ensure you are following all industry regulations, like maintaining PCI compliance. By having these systems in place, you send a powerful message to underwriters: you’re not just aware of the risks, you’re already managing them like a pro. This can make all the difference in their decision.

Partner with a Specialist

Not all payment processors are created equal, especially when it comes to hard-to-place accounts. Instead of going to a one-size-fits-all provider who might not understand the nuances of your industry, seek out a specialist. Companies that focus on hard-to-place merchants have the experience and infrastructure to support your business. They understand the specific challenges you face and have underwriting relationships and risk management tools tailored to your needs. Partnering with an expert like MBNCard means you’re not just another application in the pile; you’re working with a team that knows how to get you approved and help you succeed long-term.

How to Successfully Manage Your Account

Getting approved for a hard-to-place merchant account is a huge win, but the work doesn’t stop there. Now, the focus shifts to managing your account responsibly to ensure a long-term, stable processing relationship. Think of it as building a foundation of trust with your provider. By actively managing your account, you not only protect your business but also demonstrate that you’re a reliable partner. Over time, consistent, positive performance can even open the door to more favorable terms, like lower fees or a reduced rolling reserve.

Successfully managing your account comes down to three key areas: keeping chargebacks low, staying compliant with industry rules, and maintaining open communication with your payment provider. Proactively addressing these points is the best defense against account holds, freezes, or even termination—risks that are always higher for hard-to-place merchants. It’s about being a good steward of the trust your provider has placed in you, which is the best way to secure your payment processing for the future. Let’s break down exactly what you need to do to keep your account in good standing and build a sustainable business.

Implement a Chargeback Prevention Plan

Chargebacks are the enemy of any high-risk merchant account. Too many can quickly put your account in jeopardy. That’s why you need a solid plan to handle them from day one. This involves monitoring your transactions, understanding the common reasons for disputes, and putting strategies in place to reduce their frequency. Start by using clear billing descriptors so customers recognize your business name on their statements. A transparent and easy-to-find return policy can also encourage customers to contact you for a refund instead of initiating a chargeback. Strong chargeback prevention also means providing excellent, responsive customer service to resolve issues before they escalate.

Stay on Top of Compliance

Following industry regulations isn’t just about checking a box; it’s about protecting your customers and your business. The most important of these is PCI Compliance, a set of security standards designed to keep customer payment information safe. Ensuring your business is PCI compliant not only safeguards sensitive data but is also essential for maintaining your merchant account. Failing to comply can result in hefty fines and damage your reputation. Your payment provider can often guide you through the compliance process, offering tools and support to help you meet the necessary requirements. Don’t treat it as an afterthought—make it a core part of your operations.

Build a Strong Relationship with Your Provider

Your payment provider should be more than just a vendor; they should be a partner in your success. Keep in touch with your account provider. Regular communication helps you stay informed about any changes in policies or fees and allows you to address issues promptly. Don’t be afraid to reach out if you have questions or anticipate a major change in your business, like a big promotion that could spike your sales volume. If you have questions, their customer support team is there to help. Building a good rapport shows you’re engaged and responsible, which goes a long way in the high-risk processing world.

Related Articles

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• How to Open a Merchant Account Online: A 5-Step Guide
• High Risk Merchant Payment Processing | MBN Card Services
• Signs It’s Time to Change Your Merchant Payment Processor

Frequently Asked Questions

Is being labeled “hard to place” a permanent thing? Not at all. Think of it as a starting point, not a final verdict. This classification is based on your business’s risk profile at the time you apply. By successfully managing your account over time—keeping your chargeback rate low, maintaining financial stability, and building a positive processing history—you can demonstrate that your business is reliable. After a year or two of solid performance, you may be able to renegotiate for better terms or even qualify for a standard account.

Why can’t I just use a payment aggregator like Square or Stripe for my high-risk business? While services like Square and Stripe are great for getting started, they aren’t built for high-risk industries. Their business model relies on a low-risk portfolio, and their terms of service often prohibit businesses in categories they deem hard to place. They are known for freezing or terminating accounts with little warning once they identify a business as high-risk. A dedicated hard-to-place merchant account is underwritten specifically for your business from the start, giving you the stability you need to operate without fear of sudden shutdowns.

What exactly is a rolling reserve, and do I ever get that money? A rolling reserve is essentially a security deposit that the processor holds to protect itself from potential losses, like chargebacks. They will hold a small percentage of your daily sales for a set period, often around 180 days. And yes, you absolutely get that money back. It’s called a “rolling” reserve because as new funds are held each day, the funds that have reached the end of the holding period are released back into your bank account. It’s a continuous cycle that reduces the processor’s risk while you operate.

Will bad personal credit automatically get my application denied? It’s a common worry, but bad credit doesn’t automatically disqualify you. Processors look at the complete picture of your business. While a low credit score does signal higher risk, it can often be balanced by other strengths, such as healthy business bank statements, a solid business plan, and a low chargeback history. You may be approved with stricter terms, like a higher processing rate or a reserve, but a good provider will work with you to find a solution.

What’s the most important thing I can do to keep my account in good standing after it’s approved? The single most critical thing is to actively manage your chargeback ratio. Consistently keeping your chargebacks well below the 1% threshold is the best way to show your processor that you are a responsible and low-risk partner. This involves providing excellent customer service, having a clear return policy, and using fraud prevention tools. Keeping chargebacks under control protects your account from being frozen or closed and is the key to a long-term, healthy processing relationship.