Why This Matters
For any business selling online, the ability to accept card payments is critical. For those in high-risk industries—such as digital coaching, gaming, nutraceuticals, or crypto—the path is rarely straightforward. Matters become even more complex if you are applying for your first account without any processing history.
Banks and processors are wary. They see a lack of history as a gap in risk assessment, leaving them unable to predict chargeback levels, refund patterns, or potential fraud. Some financial institutions have been accused of overcompensating for this uncertainty—charging higher fees or imposing conditions that can stifle small merchants before they find their feet.
Still, businesses do succeed in opening accounts. The difference is in preparation, positioning, and managing expectations.
Understanding the Challenge
When you have no track record, underwriters rely on alternative signals to assess your reliability. These include:
- Ownership transparency — clear company structure and beneficial ownership details.
- Operational setup — evidence of a functional website, refund policy, and accessible customer support.
- Financial stability — proof of a business bank account in good standing.
- Reputation footprint — online reviews, domain history, and digital presence.
It is not unusual for merchants to feel frustrated at this stage. Financial institutions present themselves as “partners in growth,” but in practice, they may appear distant, hiding behind automated checks and lengthy compliance processes. This mismatch between branding and reality is something new merchants should be prepared for.
Step 1: Strengthen Your Foundations
If you cannot show card processing history, you must build credibility elsewhere. At a minimum, ensure:
- A clean corporate registration and tax certificate.
- Professional website design with SSL security, terms, and privacy details.
- A clear customer journey with visible contact details.
- Evidence of supplier contracts or fulfilment processes, if applicable.
Even modest improvements—such as refining your billing descriptor to match your brand—can reduce suspicion during the review process.
Step 2: Prepare Documentation in Advance
Applications often fail because the paperwork is incomplete or inconsistent. Before approaching providers, assemble:
- Company incorporation documents.
- Director and shareholder ID.
- Utility bills or lease agreements proving your business address.
- Recent bank statements.
- A projected sales model with realistic volume figures.
The sales model is particularly important. Inflated projections are a common reason for rejection, as underwriters may see them as a sign of inexperience or risk-shifting.
Step 3: Choose Providers with Realistic Expectations
Traditional high-street banks are often reluctant to onboard high-risk merchants without a history. Their concern is partly regulatory, but critics argue that risk is sometimes used as a blanket justification for excluding entire sectors. This creates a gap between financial rhetoric about supporting entrepreneurs and the experience of applicants.
On the other end of the spectrum, some challenger providers or non-bank institutions are more welcoming. They may offer faster onboarding, but often at the cost of higher fees, transaction caps, or rolling reserves. These conditions are not necessarily unfair—they reflect the uncertainty of underwriting a new merchant—but they can place real strain on cash flow in the early months.
The lesson? Compare terms carefully and avoid assuming that the cheapest option upfront is the safest long-term choice.
Step 4: Be Transparent About Your Business
Hiding your true industry or downplaying the risk factors is tempting, but it is short-sighted. If your real activity emerges later, providers can freeze or terminate your account without appeal.
Instead, explain your business model clearly. Outline your refund process, your dispute-handling procedures, and your fraud-prevention tools. Transparency does not guarantee approval, but it improves credibility and reduces the perception that you may be concealing more serious risks.
Step 5: Accept Initial Risk Controls
If approved, expect your provider to impose conditions until you establish a track record. These may include:
- Transaction limits to cap monthly turnover.
- Reserves where part of your revenue is held back for a set period.
- Higher merchant discount rates (MDRs) than those charged to established merchants.
While merchants often view these as punitive, they are standard practice in the sector. By demonstrating low chargebacks, timely refunds, and stable volume, you can usually negotiate improved terms after six to twelve months.
Step 6: Use Alternatives as a Stepping Stone
If your first applications fail, there are ways to start processing payments while you build credibility:
- Payment aggregators let you process under a shared account. Fees are higher, but they provide proof of transaction history for future applications.
- Virtual accounts and wallets are useful for collections but come with settlement risks if the provider faces regulatory pressure.
- Specialist non-bank providers may offer multi-currency processing with faster approval, though critics note that customer service can feel remote once issues arise.
None of these should be treated as permanent solutions. They are interim steps while you establish the record that mainstream providers want to see.
A Balanced View
Both merchants and providers have valid concerns. Merchants feel excluded by rigid rules and hidden costs, while banks and processors point to rising fraud and regulatory pressure as reasons for caution.
The reality is that the system is imperfect. Financial institutions promote customer-centric values, but many rely on algorithms that keep them at arm’s length from small businesses. Merchants, meanwhile, must learn to work within this environment—preparing documentation carefully, managing expectations, and proving reliability one transaction at a time.
Conclusion
Opening a high-risk merchant account without processing history will never be easy. But it is not impossible. By focusing on credibility, transparency, and realistic growth, you can gain approval and gradually improve your terms.
The early months require patience—both with the application process and with the conditions imposed. Over time, a clean record will allow you to renegotiate fees and reduce reserves, creating a more stable platform for growth.
If you’d like some personalised advice on the best payment solutions for your business, don’t hesitate to schedule a free consultation with our team.
For more industry insights, check out our article: “Can You Lower Fees on Your High-Risk Merchant Account?
Disclaimer
Widelia and its affiliates do not provide tax, investment, legal, or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, investment, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.
