by Matt Rej
If your business is no longer high risk or your risk profile has improved, you don’t need to switch processors to get lower rates. You can request re-underwriting on your existing merchant account and negotiate better pricing that reflects your actual risk today.
High risk merchants typically understand that they pay more for credit card processing. But what many businesses don’t understand is that high-risk pricing doesn’t automatically stick with you forever.
Maybe you were a brand new business with no processing history. Or maybe you were on the TMF/MATCH list. Or you could be operating in an industry that’s automatically flagged as high risk, regardless of how you actually run your business.
While your situation may improve over the years, your processor will never lower your rates automatically. So you’re still paying 4%, 5%, or more, which is based on a risk profile that no longer exists.
It’s natural to think switching providers makes sense. But switching is probably the worst move you can make in this situation. There’s a better way to save money on high risk processing, and it doesn’t involve a new processor or any major operational changes.
Signs Your Business Has Outgrown its High Risk Classification
Your processor originally priced your account based on a snapshot of your business at the time you applied for a merchant account. But if anything below applies to you, then the underwriting criteria they used at that time is now outdated.
You were “new” and now you’re not: New businesses with no processing history are often classified as high risk by default. But if you’ve been processing for 2-3+ years now, that justification is gone.
You’ve been removed from the TMF/MATCH list: In most cases, merchants are automatically removed from the TMF & MATCH list after five years. If not, you can request removal. But once the listing is gone, the single biggest factor driving your high risk pricing no longer exists.
You have a clean chargeback history: Even if your industry is still technically “high risk,” 12-24 months with a low chargeback ratio proves your business isn’t as risky as what your processor set prices for.
Your credit has improved: If poor personal credit got you flagged during the initial underwriting process, your account deserves a second look once you’ve rebuilt your personal credit profile.
Your business model has changed: Let’s say you shifted to more card-present sales, lower average ticket values, or you no longer sell products that are classified as “risky.” All of these factors reduce your processor’s exposure, and your pricing should reflect that.
What if You’re Still in a High Risk Industry?
You don’t have to fully escape the “high risk” label for this to work.
For example, certain industries like CBD, supplements, travel, or subscription businesses may always carry a high-risk classification tag. But there’s a big difference between high risk by category and high risk in practice.
Think about it like this. A brand new supplement company with no processing history and a high refund rate is not the same as an established supplement company with five years of clean statements, low disputes, and same volume.
It’s the same industry but with a completely different risk. Your processor’s underwriting department knows this, which is exactly why pricing varies between businesses within high risk categories.
And your actual risk isn’t some vague level. It can be measured through chargebacks, fraud activity, monitoring programs, and more. This is why you’ll notice a double standard: if your chargebacks spike, your processor reacts immediately with new fees, a bigger reserve, or threats to terminate your account.
But if your chargebacks drop or stay low, they won’t automatically discount your rates.
Processors have zero incentive to reprice your accounts on their own. It’s on you to ask for a rate reduction. And if they can use your transaction data to justify charging you more, you can use those exact same data points to justify paying less.
Why Switching Processors is the Wrong Move (Even Now)
Switching credit card processors might seem like the logical move in this scenario. You’re not high risk anymore, so you can just get a standard merchant account somewhere else, right?
Not so fast.
Changing processors is rarely worth the hassle for any business. And for current or former high risk merchant accounts, switching is even riskier. Here’s why:
- You’ll go through the full underwriting process all over again with a new provider.
- A new processor prices on their own criteria, and anything in your history that raises a red flag could still get you classified as a high risk merchant.
- Your current contract may include early termination fees or liquidated damages that cost thousands to leave.
- Any rolling reserve funds stay locked up for months even after you close your account.
- Meanwhile, your new processor may require you to fund a brand new reserve (double hit to your cash flow).
- New gateway integrations, recurring billing migrations, and staff retraining all create downtime that costs you money.
- You lose the processing history and good standing that you’ve built with your current provider.
Most importantly, your existing processor would much rather keep your account at a lower rate than lose you entirely. You have much more leverage here than you realize, and that same leverage doesn’t exist when you’re attempting to start a new relationship elsewhere.
Why High Risk Accounts Have So Much More Room to Negotiate
Margins on high risk accounts are so fat that your processor can cut your rate significantly and still make a ton of money on you. The math here is pretty simple:
- Interchange rates set by the card networks don’t change much for high risk merchant categories.
- So your processor’s underlying costs are roughly the same as they’d be on a standard account.
- Everything above interchange is your processor’s markup, meaning if you’re paying 4.5% to 5%, more than half of that cost is going straight to your processor’s pocket.
- They can cut your rate by 100-200 basis points and your processor will still earn a markup that’s well above what they’d make on a standard account.
You’re not asking your processor to lose money here. It’s just a request for them to make a more reasonable profit instead of an outrageous one.
They can keep a profitable account and you save thousands. It’s a win-win for everyone.
Your processor knows this math, too (better than anyone). But they’ll never volunteer it because they’re making so much money from you right now, especially if your risk has dropped. You just need to know which questions to ask and which buttons to push while you’re negotiating better terms.
How to Get Lower High Risk Processing Rates Without Switching
There’s no official industry-wide “reclassification” process. Every processor handles this at their own discretion, which actually works in your favor because everything is negotiable. Here’s the playbook:
1). Pull 12-24 Months of Processing Statements
Your statements are evidence and help prove you know your numbers before you call anyone. Document:
- Your monthly processing volume
- Chargeback ratio (chargebacks divided by total transactions)
- Effective rate (total fees divided by total sales)
If your chargeback ratio has stayed well under 1% for the last two years, while your processor is still charging you as if you’re a liability, you have a strong case. It also helps if your processing volume has increased over this time (the more your process, the more your processor earns).
2). Request a Formal Re-Underwriting on Your Account
Contact your processor and ask them to re-evaluate your account based on your current risk profile. Be specific about what changed.
For example, tell them your chargeback ratio was just 0.3% over the last three years. Or that your MATCH list expired a year ago. If you’ve shifted 70% of your volume to card-present transactions, mention that too.
Vague complaints of “we’re paying too much” or “we should be paying less” won’t get you anywhere.
3). Ask for Your Rolling Reserve to Be Reduced or Released
If you’re still funding a reserve account, this is often one of the fastest wins you can get. A clean processing history is exactly the type of justification that processors need to improve your reserve terms.
There are four negotiation levers you can pull here:
- Eliminate the reserve altogether: Start here, and see if you can remove this clause from your term.
- Lower percentage: If you have a 10% reserve, push for 5%.
- Shorten the hold period: Standard reserves are 180 days, but you can ask for 60.
- Release older funds: Even if they won’t kill the reserve entirely, see if they’ll schedule a release for funds beyond the current window to put cash back into your business right now.
If they refuse all of these, ask them to point to the specific risk that justifies them holding your money. This could also be a good time to consult with an expert to negotiate on your behalf if your processor continues to play hardball on a reasonable ask.
4). Get Off Tiered or Flat-Rate Pricing
High risk processors love tiered pricing because it hides their margin and allows them to profit even more the majority of your transactions that they automatically classify as more expensive buckets.
Flat-rate processing is also extremely common in the high-risk processing space because it seems “simple” for you to understand, while allowing your processor to overcharge you for the convenience and privilege of managing your “risky” account.
Demand interchange-plus pricing here. Your markup may still be higher than a standard account, but it’s the most transparent and offers you the most control.
Read more: Get Interchange-Plus Pricing Without Switching Providers
5). Audit Your Statements for Junk Fees
Beyond the base rate you pay per transaction, look for other fees that your processor might be charging you to inflate their overall margin.
Excessive PCI fees, risk assessment fees, and other miscellaneous fees that were tacked on just because you’re a “high risk” may no longer hold water. And they probably shouldn’t have been charged to begin with, as this stuff was likely baked into your initial rates.
These can easily add thousands of dollars in processing fees to your account every month. So do whatever you can to get them removed (and refunded where possible).
6). Negotiate Your Markup Closer Toward Standard Account Territory
For context, a good rate on high risk processing is around 3.5% to 4% effective. This is a good benchmark to determine where you stand right now, and how much your processor may be overcharging you.
But if you’re no longer a high risk, you shouldn’t be settling for high-risk pricing at all. A good effective rate for a standard account is closer to 2.5% or 3%.
That’s what you should be targeting.
7). Get Everything in Writing
Whatever your processor agrees to over the phone means absolutely nothing.
Make sure you get the new rate, pricing model changes, reserve terms, fee removals, and everything else documented in writing before you consider this done.
And even after it’s put in writing, continue to monitor your statements closely to ensure everything you agreed to is actually applied (it’s common for there to be a lag here).
What If Your Processor Says No?
Sometimes your processor will stonewall you. They’ll say things like:
- “That’s our standard high risk rate.”
- “Your industry doesn’t qualify.”
- “We can’t change the reserve.”
- “You’re already getting the lowest possible rate for your account type.”
- “There’s nothing we can do”
None of this is likely true. Remember, it’s not in their best interest to be easy here because we’re talking about cutting their margin.
“No” usually just means “not unless you push harder.”
Processors deny rate reductions as a matter of policy because that’s what their reps are trained to do. Then they’ll approve them if you escalate the situation or make them believe you’ll actually leave.
This is exactly what we do here at MCC every single day. When a business asks for a lower rate but their processor won’t provide it, we come in and handle the negotiations on their behalf. We know where they’re floor is, and we’ll help ensure you get the best possible rate.
And if your processor refuses to budge on anything and it’s determined that you’re overpaying on high risk processing, switching may become a legitimate option. But it shouldn’t be your first move (or second, or third, for that matter). It’s a last resort and usually it won’t come to that. Let your current processor compete for your business before you walk away. They almost always do.
Stop Paying for a Risk Profile That No Longer Exists
High risk pricing is supposed to compensate your processor for actual risk. But if you have a clean history, expired MATCH listing, or years of stable processing, that risk is gone and your rates should reflect that.
Even if your industry is still tagged as “high risk” there’s still room to save. And you don’t need to switch processors to make that happen.
Our team here at MCC can audit your statements for free, determine whether your account is priced for a risk you no longer pose, and negotiate directly with your current processor to fix it. No switching, and no disruptions to your business.