Getting labeled as “high risk” can feel like you’re stuck with higher fees, slower payouts, and more frozen funds than actual deposits. But that label isn’t permanent. If you take the right steps, you can shift your merchant profile into the low risk category—and start getting treated like it.
Here’s what you need to know and what to fix if you want better rates and fewer headaches from banks and payment processors.
What Makes a Merchant Low Risk?
Low risk merchants are those who meet certain benchmarks that signal stability, trust, and fewer dispute triggers. Payment processors and banks often use a mix of factors to decide how risky you are:
- Chargeback rate: Less than 0.9% (Visa) or 1.0% (Mastercard)
- Refund rate: Below industry average (typically under 5%)
- Consistent transaction volume: No sudden spikes or drops
- Product type: Digital goods, adult services, supplements, dropshipping, and travel are considered high risk
- Business history: Companies with at least 6–12 months of clean history are safer bets
- Location: Businesses based in regulated, low-fraud regions like the US, UK, or Canada
- Processing method: Card-present and 3D Secure transactions are safer than card-not-present
If your business checks most of these boxes, you’re more likely to qualify for better terms and more leniency with banks.
How to Improve Your Risk Profile
Becoming a low risk merchant isn’t instant, but it’s doable. Here’s where to start.
1. Cut Your Chargeback Rate
Most processors will flag you if your chargeback ratio goes above 1%. Aim for 0.6% or lower. This means:
- Respond to complaints quickly
- Offer clear refund and shipping policies
- Use recognizable billing descriptors
- Use fraud filters to block suspicious orders
- Track disputes and submit solid evidence
If you’ve already been flagged, you may need a chargeback management tool to help recover your numbers.
2. Watch Your Product Category
Selling a risky product type automatically puts you in the high risk bucket—even if your metrics are clean. If possible, adjust how you present your business.
For example, if you’re in digital downloads or coaching, pick an MCC (merchant category code) that reflects education or software instead of generic online services. Just be honest and transparent. Mislabeling your business can get you shut down entirely.
3. Keep Refunds Low
Refunds aren’t as bad as chargebacks, but they’re still a red flag if they pile up. Customers asking for refunds often means they didn’t get what they expected.
Audit your landing pages, product descriptions, and delivery times. Avoid overpromising, and make sure your support team is easy to reach.
4. Use a Reliable Payment Processor
Some processors specialize in low risk merchants. They have faster payout schedules, better tools, and more predictable fees. Switching from a high-risk gateway to a more trusted one can help improve how banks and card networks view your business.
If you’re stuck with Stripe or PayPal and your account is at risk, consider looking into third-party options or chargeback software that can help you manage disputes more effectively.
5. Avoid Sudden Spikes
If your revenue jumps overnight, that can raise red flags. Even if you’re scaling fast, space out your ad spend and monitor your volume week to week.
Gradual growth looks safer and gives your processor time to adjust your limits.
Why It’s Worth Qualifying as Low Risk
Low risk merchants get:
- Lower transaction fees
- Quicker payouts
- Fewer rolling reserves
- Better approval odds for loans or credit lines
- Less scrutiny from banks and card brands
If you’re applying for new payment processing or trying to fix a frozen account, showing that you’ve done the work to lower your risk makes a real difference.
FAQ: Qualifying as a Low Risk Merchant
What is considered a low risk chargeback rate?
A chargeback rate under 0.9% for Visa and 1.0% for Mastercard is usually considered acceptable. To qualify as low risk, try to stay around 0.6% or lower.
Can my product type make me high risk even if I have no disputes?
Yes. Some product types are automatically flagged regardless of your performance. High risk industries include digital services, adult content, supplements, travel, and dropshipping.
Does my country of incorporation affect my risk level?
Yes. Businesses based in countries with stronger banking regulations and lower fraud rates are generally seen as lower risk. US, UK, Canada, and EU countries are preferred.
How long does it take to become a low risk merchant?
It depends on your metrics and product type. If you clean up your chargeback and refund rates, and maintain steady volume for 3–6 months, you may start qualifying for better terms.
Can I still qualify if I had a past suspension or chargeback spike?
Possibly. Processors look at your recent history more than old events. Use chargeback tools to recover your rate and keep your account stable for several months to rebuild trust.
Chargeblast Can Help You Get There
Chargeblast helps merchants lower their chargeback rate and keep it low. With real-time alerts, auto-responses, and clear dashboards, you can clean up your profile and show payment providers you’re a safe bet.
Book a demo below to experience it yourself.
