Underwriting Guidelines High Risk Merchant Account

Underwriting High Risk Merchant Accounts

High risk merchant account providers hire an underwriter to help them assess whether an applicant should be approved for an account or not. Like a quality control personnel, an underwriter makes sure that the applicant passes the requirements outlined by the provider in its criteria of merchant account approval. Different MAPs have different criteria of judging whether a business is high risk or not. Among domestic MAPs, an applicant is declined if it is considered high risk. But for those who apply for offshore merchant accounts, the likelihood of getting approved is far greater.

The task of underwriting an application may be complicated, but there are criteria involved that make it easier. Underwriters are responsible for assessing how much rolling reserve should be put on a company, as well as check on the following:


Product Type

Is the product tangible or intangible? Is it adult-oriented? Does it target a local or international market?

Means of Delivery to Customer

If products are shipped internationally, the higher the risk involved. Also, if they are delivered after 90 days of payment, it has a very high contingent liability and may be declined.

Lifetime Membership

High risk is involved if the company offers services or products upon lifetime membership. This is still based upon the risk of contingent liability in which chargebacks will likely be incurred if services or products are not delivered in the future.


Fraud History Checking

It is obvious that companies involved in fraud, especially in the sale and delivery of fake pharmaceuticals, will be declined by the high risk merchant account provider. Fraud also happens when merchants process credit cards which the credit card holders have not authorized.

Processor Switching

It may be that the merchant applicant is merely switching from one MAP to another. Underwriters assess all the information such as credit history and statements of the applicant when he switches to another MAP.

Chargeback History

Most providers would tolerate a certain percentage of chargebacks but there are still percentage criteria before actually getting approved.

Credit History

Merchants who have a good credit rating will most certainly find favorable result upon application but even merchants with poor credit may get approved. It is imperative, however, to maintain a good credit rating throughout the duration of the business since it will help a merchant survive in the high risk industry.



Needless to say, the higher the risk, the higher the discount fee and accompanying rates for the merchant account application. See "Merchant Provider Fees: Let's Talk Pricing" for more information about this topic.


Consider yourself lucky if you happen to find a high risk merchant account provider that will welcome your business. Some MAPs actually decline a particular service, product, or business such as online casinos or multilevel marketing "just because" they want to. They will even decline a particular business if it is based in a particular offshore country or bank.


There are several types of risks involved when assessing a high risk merchant account application. However, the most aggravating of these is the contingent liability. As mentioned above, a business that relies on lifetime delivery of product is the most likely to be declined. Unlike risks on fraud or credit, contingent liability increases the possibility of chargebacks in the future. If a merchant is not able to deliver the product or service as promised, customers will want a refund. Generally, the longer the allowance period from the payment to the delivery of the product/service, the higher the risk. Also, if there is little or no proof that it has been deliverd, such as a movie file downloaded online, the higher the risk that is involved.


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