High-Risk Merchant Accounts: How to Get Approved in the UK

A high-risk merchant account is a card payment facility provided to businesses that, due to the nature of their industry or trading model, pose a greater financial risk to the acquirer.

Common reasons businesses are classed as high-risk:

• They take advance payments for goods/services not delivered immediately

• They operate in sectors prone to chargebacks, fraud, or regulation

• They sell high-value or non-refundable goods

• Their customers are based overseas or use foreign cards

• The business is new, unproven, or has limited trading history

Some common UK industries considered high-risk by merchant service providers include:

• Travel and tourism (especially holidays sold in advance)

• Airlines and accommodation providers

• Online gambling or gaming

• Wholesale and distribution (especially electricals or alcohol)

• Tobacco and CBD products

• Multi-level marketing (MLM)

• Subscription-based services

• Adult content or escort services

• Digital goods, software, or tech support

From the acquirer's point of view, every transaction represents a financial liability. If your customer pays by card today, and you fail to deliver the product or service tomorrow, the cardholder is entitled to a refund — and the acquirer is liable if you're unable to repay it.

That’s why they calculate something called exposure.

Exposure is the estimated financial liability the provider would face if you stopped trading and could no longer fulfil customer orders.

Exposure is typically calculated as:

Average transaction value × number of days pre-payment × average daily transaction volume

Example:
If you take £500 payments for holidays booked 90 days in advance, and you process £3,000/day:

£500 × 90 days = £45,000 exposure per customer
If you're processing 6 transactions/day = £270,000 estimated daily exposure

This is why businesses in travel, events, or pre-booking sectors face stricter requirements — their exposure is significant even with moderate turnover.

Once exposure is calculated, acquirers compare it to your net worth (total assets minus liabilities).

If your business has a strong balance sheet, they may approve the facility with no or limited security.

If your net worth is lower than your exposure, the provider may:

• Decline the application

• Request personal guarantees

• Request a rolling reserve or bond

• Ask for more documents to assess future risk

The stronger your supporting documents, the better your chances of approval. Here's what you should prepare:

For All High-Risk or New Businesses:

• Opening balance sheet (shows net worth if new)

• Cashflow forecasts and business plans

• Bank statements (last 3–6 months)

• Full company accounts (most recent if available)

• Details of directors/shareholders and experience

Sector-Specific Extras:

• Travel Agencies

  • ATOL certificate

  • ABTA membership (if applicable)

  • ATOC or T-OMS registration

  • Most recent ATOL renewal submission or financial accounts

  • Insurance policy details (e.g. insolvency cover)

• Wholesalers

  • Aged debtor report

  • Breakdown of customers and credit terms

  • Explanation of delivery/fulfilment process

• Subscription Models

  • Terms and conditions

  • Refund/cancellation policies

  • Expected chargeback rate

• Digital Goods

  • Product delivery method

  • Anti-fraud tools used

  • Licencing agreements (if applicable)

If approved, you may be offered a facility with security conditions to limit the acquirer’s exposure:

• Rolling reserve: A percentage of your turnover (e.g. 10%) held back for 90–180 days

• Fixed reserve or bond: A lump sum held in trust

• Delayed settlement: Funds paid to you after 7–14 days instead of next-day

• Capped processing volumes: Temporary limits until proven performance

These terms may be temporary and reviewed after 3–6 months of clean trading.