A high-risk merchant account differs significantly from a traditional merchant account in many ways. Traditional merchant accounts are usually used by low-risk merchants, while a high risk merchant account is a specialised account for high-risk businesses. Here's a breakdown of the primary differences:

• Traditional merchant accounts are for low-risk industries such as retail, restaurants, and brick-and-mortar stores, which typically have lower chargeback and fraud rates. In contrast, High-risk merchant accounts are designated for businesses operating in industries with a higher likelihood of chargebacks, fraud, or regulatory scrutiny. Examples include adult entertainment, online gambling, CBD products, forex, and subscription-based services.
• Traditional accounts are easier to obtain, with lower underwriting requirements. Whereas, High-risk accounts need thorough evaluation and may take a longer time. Merchants need to provide extensive documentation, including financial statements, credit history, and business plans, to prove their stability and ability to manage the heightened risk.
• Traditional merchant accounts enjoy lower processing fees and may even benefit from special rates for businesses in low-risk industries. In comparison, High risk merchant accounts come with higher processing fees and transaction rates compared to traditional accounts.
• Traditional merchant accounts usually do not require rolling reserves, allowing businesses to access their funds more quickly. At the same time, High-risk merchant accounts require rolling reserves.
• Traditional businesses may have fewer chargebacks and thus require less emphasis on chargeback prevention. High-risk merchant accounts come with robust chargeback management strategies to reduce the risk of disputes.

Overall, the primary difference between high-risk and traditional merchant accounts lies in the level of risk associated with the business. High risk payment processing comes with higher fees, stricter approval processes, and greater regulatory scrutiny due to the nature of the industries they serve. Businesses categorized as high-risk must carefully consider these factors and work with experienced payment processors, such as WebPays, to manage the unique challenges they face in their respective industries.